Financial markets on edge as October begins with bond market turmoil

Financial markets are on edge as October begins, with the bond market the primary focus after U.S. ten-year Treasury yields jumped from 3.9% in February to 5.2% last week, following the U.S.-Israeli attack on Iran. The rise has spread globally, pushing Dutch ten-year yields from 2.7% to 3.7% and lifting long-term mortgage rates by over a percentage point. Drivers include persistent inflation risks, U.S. budget deficit concerns, and strong corporate credit demand, especially from tech data centers. Key data this week—consumer confidence, PCE inflation, and Friday's jobs report—will test markets. Higher-than-expected figures could fuel further yield increases and pressure stock markets, which historically suffer when bond yields climb sharply.