FTSE 100 suffers worst sell-off since May as global bond rout pushes US Treasury yields to a 24-year high

From the Newshound archive · first published 1 October 2026.

Banking giants Standard Chartered, HSBC and NatWest all fell more than three per cent as London's blue-chip index shed two per cent in early trading, wiping out all its third-quarter gains in a single morning. Surging bond yields — driven by Iran war-fuelled energy prices and ballooning government deficits — have spooked investors worldwide, sending European and US futures to three-month lows. The 10-year US Treasury yield has hit its highest level since 2002, capping America's worst quarter for bonds since 1994.

Saxo strategist Neil Wilson warned the bond rout is 'sending investors running for cover' as France, Germany and the Netherlands all opened sharply lower.

Jefferies chief European economist Mohit Kumar said the bigger threat is not inflation but deficits, warning no major economy is making any effort to rein in spending ahead of a heavy 2027 election cycle.

Housebuilders and construction firms including Barratt Redrow were among the biggest FTSE losers, with traders betting elevated energy prices will persist.