30.03.202609:35:05UTC+00Italy’s 10-Year Yield Remains Above 4%

Italy’s 10-year BTP yield remained above 4%, hovering near its highest level since November 2023 and heading for an increase of nearly 80 basis points in March. Investor sentiment stayed cautious amid mounting economic risks from the escalating conflict in the Middle East, as reports of US troop movements in preparation for a possible ground operation overshadowed earlier diplomatic optimism.

Inflation worries intensified after flash CPI data from Germany and Spain pointed to renewed upward pressure on prices, while a Eurozone business survey showed a sharp decline in confidence alongside a surge in inflation expectations. In response, markets have sharply revised their outlook for ECB policy, now pricing in at least two rate hikes in 2026—and potentially a third—replacing previous expectations that had assigned a 40% probability to a rate cut.

French central bank governor François Villeroy de Galhau reaffirmed the ECB’s commitment to containing energy-driven inflation, but emphasized that it is still “too early” to specify the timing of any policy moves.