Treasury bonds are heading into a historically weak October, following a September selloff that has pushed yields to multi-year highs. This weak seasonal pattern, which has seen Treasuries post median losses of 0.9% in September and 0.7% in October over the past decade, is being exacerbated by several current factors.
The ongoing U.S.-Iran war is adding uncertainty to global markets and increasing demand for scrutiny of government borrowing conditions. Furthermore, persistent fiscal concerns and a hawkish stance from the Federal Reserve, aiming to rein in inflation, are exerting additional pressure on the Treasury market. This combination suggests that the difficult stretch for bonds is likely to continue into October.
September 2026 is on track to be the worst for Treasuries since 2023, extending a historically weak seasonal trend and offering little indication of immediate relief for investors. The surge in Treasury yields, with the two-year U.S. Treasury yields alone rising almost 60 basis points in September, is also beginning to impact stock markets by increasing borrowing costs and clouding the outlook for economic growth and corporate earnings.
