Italy's BTP Yield Holds Near 2-Month Low
Italy’s 10-year BTP yield held near 4.35%, close to a two-month low, as markets assess the monetary policy outlook in the US and Europe. A stronge US jobs report reinforced bets on a December Fed rate hike, eroding some of the previous gains driven by safe-haven demand amid concerns over a potential political gridlock in Washington. Appetite for sovereign debt as a safe haven was also dampened by renewed diplomatic momentum in the Middle East, although no agreement has been signed yet. In Europe, markets see a lower likelihood of a December rate hike, given the eurozone’s fragile growth outlook. With elevated energy costs continuing to fuel inflation, which stood at twice the ECB’s 2% target in October, borrowing costs remain near multi-year highs and are an additional drag on growth. Uncertainty surrounding the ECB’s leadership transition also remains in focus. Still, policymakers have signalled their readiness to raise rates again if inflation fails to ease.
Italy’s 10-year BTP yield held near 4.35%, close to a two-month low, as markets assess the monetary policy outlook in the US and Europe. A stronge US jobs report reinforced bets on a December Fed rate hike, eroding some of the previous gains driven by safe-haven demand amid concerns over a potential political gridlock in Washington. Appetite for sovereign debt as a safe haven was also dampened by renewed diplomatic momentum in the Middle East, although no agreement has been signed yet. In Europe, markets see a lower likelihood of a December rate hike, given the eurozone’s fragile growth outlook.
With elevated energy costs continuing to fuel inflation, which stood at twice the ECB’s 2% target in October, borrowing costs remain near multi-year highs and are an additional drag on growth. Uncertainty surrounding the ECB’s leadership transition also remains in focus. Still, policymakers have signalled their readiness to raise rates again if inflation fails to ease.