FX.co ★ Italy 10-Year BTP Yields Edge Close to One-Week Low

Italy's 10-year BTP yields remain steady at approximately 3.5%, hovering near a one-week low, as market participants analyze critical economic updates from across Europe. Key indicators reveal a moderation in inflation, highlighted by a decline in December's CPI to a five-month low in Germany's North Rhine-Westphalia, and unexpectedly subdued annual CPI figures in France, the lowest in seven months. Additionally, eurozone economic momentum has tapered, with HCOB's final composite PMI decreasing to 51.5, marking a three-month low. In response to these trends, the money markets currently ascribe almost no likelihood to an ECB rate hike by December 2026 and estimate a 24% probability by March 2027. Investors are now eyeing the forthcoming eurozone inflation data, due Wednesday, which could shed light on the European Central Bank’s prospective policy direction. In Italy, the Parliament sanctioned the 2026 budget on December 30, aiming for a fiscal deficit target of 2.8% of GDP. The Finance Ministry outlines plans for total bond issuance ranging from €350 to €365 billion for the year.