FX.co ★ Italy’s 10-Year BTP Yields Rise to 1-Month High

The yield on Italy's 10-year BTP surged past 3.5%, reaching its highest since October 9. This increase comes amidst a broader rise in global bond yields, as investors evaluate the European Central Bank's (ECB) policy direction along with fiscal concerns in Europe. ECB official Isabel Schnabel expressed confidence with market projections suggesting the ECB's next maneuver might involve a rate hike, pointing out that risks to growth and inflation are leaning towards the upside. These observations, coupled with sustained economic activity and inflation nearing target levels, have strengthened the expectation that the ECB will likely maintain its current rate until 2026. On the fiscal side, Italy is showing signs of stability, forecasting its budget deficit to drop below 3% of GDP by 2025, a decrease from 3.4% in 2024, and surpassing an earlier 3.3% target. Meanwhile, Germany's 2026 budget anticipates borrowing close to €180 billion, whereas France has approved the tax component of its 2026 social security budget, following concessions made by Prime Minister Lecornu to preserve the legislative timetable.