27.03.202609:05:37UTC+00Italy’s BTP Yields Spike as Iran Crisis Fuels Inflation

Italy’s 10-year BTP yield has climbed above 4.1%, approaching its highest level since November 2023 and on track to end March nearly 80 basis points higher. The intensifying conflict involving Iran has pushed energy prices sharply higher, leading investors to pivot from anticipating ECB rate cuts this year to pricing in at least two rate hikes, with a third now seen as possible. Tensions escalated further after US President Donald Trump extended his deadline for Iran to reopen the Strait of Hormuz or face military strikes, even as Washington and Tehran delivered conflicting accounts of diplomatic progress. Although German Foreign Minister Johann Wadephul confirmed that indirect contacts are under way and that direct talks are planned in Pakistan, markets remain skeptical of a rapid breakthrough, viewing the postponement as a move to strengthen military preparedness. Adding to the pressure, Spain’s post-war HICP inflation accelerated to 3.3% in March from 2.5% in February, driven by a sharp rise in fuel and lubricant prices, though the reading still came in below the 3.9% consensus forecast.