FX.co ★ Italy 10-Year Yield Hits Two-Week High

Italy's 10-year government bond yield increased to 3.56%, marking its highest point in two weeks, in anticipation of Fitch's forthcoming sovereign rating assessment. It is widely anticipated that the agency will enhance Italy’s credit rating by one level, buoyed by political stability and improved public finances, following similar upgrades to other peripheral eurozone nations such as Spain and Portugal. In recent weeks, Italian bond spreads compared to Germany and France have narrowed, indicating improved fiscal conditions. Economy Minister Giancarlo Giorgetti has indicated that Italy’s budget deficit could fall below the European Union’s 3% threshold this year, a full year earlier than scheduled. Meanwhile, government bonds across the broader eurozone have experienced volatility due to increased issuance of German debt and diverging policies among central banks. The Federal Reserve reduced interest rates after a nine-month hiatus, while the Bank of Japan held steady but signaled potential for a rate hike later this year. The Bank of England also maintained its borrowing rates at current levels.