FX.co ★ Italy's BTP Yield Slips to 6-Week Low

Italy’s 10-year BTP yield hovered around 4.44%, retreating from a three-year high to a six-week low, in line with the movement in US Treasury yields, which remain highly sensitive to oil price volatility amid ongoing US–Iran diplomatic efforts. Additional support came from the Democratic sweep in the US midterm elections. Nonetheless, persistently high energy prices continue to stoke inflationary pressures and raise concerns about fiscal spending. Eurozone headline inflation rose to 4% in October, twice the ECB’s target. Policymakers have indicated they are prepared to deliver a third rate hike since the outbreak of the Middle East conflict if the inflation outlook fails to improve, while markets still price in another increase in December. Across Europe, governments are expanding energy support measures to protect households from surging costs ahead of next year’s elections, as cost-of-living protests spread across the continent, including in Italy. Meanwhile, Rome is preparing to approve a decree this week designed to curb the impact of soaring gas prices on electricity bills.