FX.co ★ Italy’s BTP Yields Climb as Middle East Tensions Fuel Inflation Worries

The yield on Italy’s 10-year BTP climbed above 3.9%, nearing a two-year high, as the unresolved conflict in the Middle East drove oil prices higher and stoked inflation concerns. Washington maintained that Tehran is pursuing a deal while simultaneously deploying additional troops to the region, but Iran’s foreign minister rejected the prospect of talks and instead demanded control over the Strait of Hormuz. In response, markets now anticipate three ECB rate hikes by year-end, up from two previously, after ECB President Christine Lagarde warned that the bank could act “at any meeting” to counter inflation risks stemming from energy shocks.