Italy’s 10-year BTP yield held just above 3.4%, hovering near a one-month low, as stronger-than-expected US labor data prompted investors to pare back expectations for imminent Federal Reserve rate cuts. US nonfarm payrolls rose by 130,000 in January, the largest increase in more than a year, while the unemployment rate unexpectedly fell to 4.3%, highlighting the labor market’s continued resilience at the start of 2026. Markets now fully price in a Fed rate cut by July instead of June, with the probability of a move in March dropping below 5%.
In Europe, investors also assessed indications that the European Central Bank is broadly comfortable with the euro’s recent appreciation, alongside reports that Bank of France Governor François Villeroy de Galhau, viewed as a dovish policymaker, will step down earlier than planned. ECB President Christine Lagarde recently stated that the inflation outlook remains in a “good place,” while downplaying concerns about the strength of the common currency.
