Bond yields spike, equities shrug it off

Gilts and Treasuries sold off hard mid-week on inflation worries, then eased into Friday; stocks in the US, UK and India all finished the week higher regardless.

Abhineet RaiFounder · Wealth Adviser Week ending Friday 9 October 2026 About a four-minute read

The week in figures

Each figure as at its own date · sources below

Bank Rate 3.75% Unchanged9 Oct ECB refinancing rate 2.65% Unchanged9 Oct Fed funds target 3.75–4.00% Unchanged8 Oct UK 10-year gilt 5.43% +10 bps8 Oct US 10-year Treasury 5.24% −4 bps9 Oct US 2-year Treasury 4.80% −3 bps9 Oct GBP / USD 1.3220 +0.1%9 Oct GBP / EUR 1.1798 +0.3%9 Oct Brent crude $125.44 −7.4%6 Oct

UK CPI inflation 3.1% +0.2 pp31 Aug

Equities are pricing a world where this bond selloff was noise

The week's most striking fact is not any single number but the gap between two markets that are supposed to agree. Gilts and Treasuries sold off hard enough that the UK 30-year reached its highest yield since January 1998 and the US 10-year touched levels last seen in 2002. Bond investors spent the week repricing for inflation that stays higher for longer, and for governments that need to borrow more than they hoped. Equity investors spent the same week pushing the Nasdaq Composite to a closing record and sending the FTSE 100 and India's Nifty 50 higher. One of these markets is wrong about what the bond move means, or more likely, both are right about different things and talking past each other.

The bond story has a clear cause. The Federal Reserve's own minutes from its September meeting, released this week, showed every member agreeing to raise rates to 3.75%–4.00%, with most officials expecting to raise again this year.1 The Bank of England's rate-setters are split three ways on the same question, and the Reserve Bank of India actually acted, raising its repo rate to 5.50%.2 That is three central banks in three different postures within the same week, which is not the behaviour of institutions converging on a view. It is the behaviour of institutions each managing their own inflation problem, with energy prices as the common thread running through all three.

The equity story has a different cause: earnings, and the hope attached to them. The Nasdaq's record run and the Nifty's sharpest single-day rally in over two months both leaned on company results and on oil easing after Donald Trump said the US would not strike Iran before next month's midterms.3 That is a reason to rally that has nothing to do with whether central banks are closer to done raising rates or further from it. What this week does not change is the underlying disagreement: bond markets are pricing persistent inflation and higher term premia, while equity markets are pricing resilient earnings and a geopolitical risk that has, for now, receded. Portfolios built around the idea that both can be true for a while longer were not tested this week. They may yet be.

Abhineet RaiFounder · Wealth Adviser, Rai Wealth Management

Equities

US · UK · India

The S&P 500 gained about 1.15% on the week and the Nasdaq Composite closed at an all-time high of 27,599.89 on Tuesday, before both indices finished Friday higher again as oil eased and tech rebounded.4 The rally came despite a mid-week bond rout that briefly pushed the S&P 500 off its earlier record.3
The FTSE 100 closed Friday at 10,552.05, up 1.06% on the day and about 0.86% on the week, even as gilt yields hit their highest since 2007 earlier in the week.5 Mining and data stocks led Friday's rebound once oil prices eased.6
India's Nifty 50 and Sensex both rose on the week, ending an eight-week losing streak, helped by Tata Consultancy Services results that sent the stock up nearly 5% and ignited a rally in IT shares.7 The RBI's rate decision and easing crude prices were cited as the other main drivers.8

Rates & Fixed Income

UK · US · India

UK 30-year gilt yields jumped to 6.036% on Wednesday, their highest since January 1998, as a global bond selloff added pressure ahead of the government's budget later this month.9 The Bank of England's chief economist said this week that central banks have to keep their focus on fighting inflation even as bond yields rise around the world.10
The Federal Reserve's September minutes, published this week, showed every member backing the rate rise to 3.75%–4.00%, with most officials projecting at least one further increase this year.1 Treasury yields eased by Friday on strong demand at a 30-year auction.11
The Reserve Bank of India raised its policy repo rate by 25 basis points to 5.50%, its first increase since February 2023, and shifted its stance to calibrated tightening.2

Commodities

Oil & gas · Gold

WTI crude fell 1.7% on the week to $96.24 a barrel, easing after Donald Trump said the US would not attack Iran before the midterm elections.12 That drop in oil helped lift both Indian and UK equities into the end of the week.6
Henry Hub natural gas rose 4.5% on the week to $3.03 per million BTU.13
Gold touched a two-month low mid-week as a stronger dollar and rising Treasury yields weighed on it, then rebounded to head for a weekly gain of about 1.3%.14

Currencies

GBP

Sterling edged up against both the dollar and the euro this week even as gilt yields rose sharply, which is not the usual pairing when a government's borrowing costs climb this fast.

What I'm Watching

The week ahead

The UK budget is due on 28 October, and this week's gilt selloff raises the stakes for how the Chancellor addresses borrowing.9
The ECB's next decision falls on 29 October, against a sharp jump in euro-area inflation reported at the start of the month.15
The Federal Reserve meets on 27–28 October, with futures-implied odds of a further hike having fallen sharply since the September minutes were published.16
US bank earnings begin next week, the first full test of whether the Nasdaq's record run is matched by results.17

Sources

Market Snapshot figures from Bank of England, ECB Data Portal, New York Fed, US Treasury, EIA and ONS. Contains public sector information licensed under the Open Government Licence v3.0.

Abhineet Rai

Founder · Wealth Adviser, Rai Wealth Management

Abhineet founded Rai Wealth Management after more than two decades in banking, including spells as a Director in Private Banking at Credit Suisse, Bank of Singapore and HSBC Private Bank in London. He trained at the National Defence Academy in India before taking an MBA, and holds certifications in Investment Planning, Securities & Derivatives, and Regulated Mortgage advice.

20+ years in banking
Credit Suisse · Bank of Singapore · HSBC
NDA-trained, then MBA

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How this issue was prepared. The research and first draft were produced with AI assistance from primary-source data. Every figure was checked against its source before publication, and the commentary and the whole issue were reviewed, edited and approved by Abhineet Rai before it was sent.

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