FX.co ★ Italy’s BTP Yield Climbs to February High on Inflation Worries

Italy’s 10-year BTP yield climbed toward 3.5%, reaching its highest level since February 3, as investors reacted to stronger-than-expected Eurozone inflation data and escalating tensions in the Middle East. February data showed Eurozone annual inflation at 1.9% and core inflation at 2.4%, both exceeding forecasts, while Italy’s HICP rose sharply to 1.6% from 1% in January, well above the expected 1.1%.

Market pressures were compounded by a surge in energy prices, with natural gas and crude oil jumping after the formal closure of the Strait of Hormuz and the continued suspension of Qatari LNG exports. The rise in energy costs is expected to keep inflationary pressures elevated across Europe, potentially encouraging the European Central Bank to maintain a hawkish policy stance.

At the same time, US President Donald Trump stated that the military campaign against Iran could last four to five weeks, while emphasizing that US forces are prepared to extend operations if necessary.