FX.co ★ Italy’s BTP Yield Spikes to 4.1% on ECB Hike Bets

Italy’s 10-year BTP yield rose to 4.1%, its highest level since November 2023, as the protracted US-Israel-Iran conflict entered its fourth week and climbing energy prices strengthened expectations of future ECB rate hikes. Crude prices spiked after Iran pledged to strike Israel’s power grid and US military supply chains in retaliation for Trump’s threat to destroy Iran’s energy sector if the Strait of Hormuz remains closed—a sharp reversal from his recent assertion that the war was de-escalating. Markets are now pricing in three ECB rate increases in 2026, and the central bank’s latest decision to keep rates on hold has been overshadowed by higher inflation projections and weaker growth forecasts, highlighting the mounting economic fallout from the deepening crisis.