FX.co ★ Italy's BTP Yield Holds Near 3-Year Peak

Italy’s 10-year BTP yield hovered around 4.50%, near its highest level in three years, as investors digested recent economic data and prepared for weekend protests across France, Germany, and Italy. These demonstrations follow a wave of protests earlier in the month over the rising cost of living and higher defense spending, some of which turned violent. Surging energy costs linked to the Middle East conflict have intensified inflationary pressures across Europe, pushing Italian inflation to a three-year high. Still, carry-over economic growth reached 0.8% in Q3, broadly in line with the government’s 1% growth forecast for 2026. The ECB left interest rates unchanged at its October meeting, while avoiding clear guidance on the future policy path, and a rate hike in December is still anticipated. Meanwhile, Italy approved its budget this week, with the deficit projected to rise to 3.4% of GDP in 2027, up from 2.9% this year, amid higher defense and energy spending designed to shield households ahead of next year’s elections.