FX.co ★ Italy’s BTP Yields Ease on Iran War Hopes

Italy’s 10-year BTP yield fell to 3.8%, retreating from more than two-year highs, as growing optimism over a possible near-term resolution to the Iran conflict eased concerns about soaring energy prices and aggressive ECB rate hikes. Sentiment improved after US President Donald Trump indicated that the US could leave Iran "in two or three weeks," with or without a deal, though mixed signals from Washington continue to cloud the outlook as the war enters its fifth week. Markets have scaled back expectations for ECB tightening and now anticipate only two rate increases by December, down from three projected earlier this week. Before the conflict began, investors had expected no rate hikes in 2026 and even saw a modest chance of policy easing.