FX.co ★ Italy’s Bond Yield Rises on Hawkish Central Bank Signals

Italy’s 10-year BTP yield increased to 3.4%, marking its highest point since October 14, as investors processed hawkish signals from central banks in both the Eurozone and the United States. The European Central Bank maintained interest rates for the third straight meeting, stating that the inflation outlook remains largely unchanged. Meanwhile, the Federal Reserve reduced rates by 25 basis points for the second time this year, with Chair Jerome Powell emphasizing that further rate cuts in December are "not a certainty." Despite the rise in yields, Italy saw a decrease in borrowing costs during Thursday's auctions. The Treasury successfully issued €4.5 billion of a new 10-year BTP, due in February 2036, at a 3.46% gross yield, the lowest recorded since November 2024. Economic reports revealed that Italy's economy unexpectedly stalled in the third quarter, impacted by a decline in the industrial sector and stagnant services. Furthermore, the unemployment rate increased to 6.1%, surpassing the anticipated 6%.