FX.co ★ Italy’s BTP Yields Climb as Iran Tensions Fuel Rate Hike Bets

Italy’s 10-year BTP yield rose to 3.9% after the extended Easter break, reflecting renewed pressure on European sovereign debt amid escalating tensions in the Middle East. Investors have adopted a cautious, wait-and-see stance ahead of US President Donald Trump’s deadline for Iran to reopen the Strait of Hormuz and agree to a ceasefire or face severe repercussions. Trump’s warning of potentially large-scale strikes on Iranian infrastructure has pushed energy prices higher, leading markets to price in three ECB rate hikes this year. Further adding to the pressure, recent data showed Eurozone inflation accelerating to 2.5% in March, the highest level in more than a year.