Italy 10-Year Bond Yield at Over 3-Week Low

Italy’s 10-year government bond yield eased further to around 3.52%, a fresh low since mid-August, as markets anticipated a Fed rate cut and tracked political developments in France. With opposition leaders pledging to vote Bayrou out shortly after his confidence motion announcement late last month, the government’s collapse is largely priced into markets, which are therefore expected to react only modestly. The spotlight now moves to Thursday’s European Central Bank meeting, where policymakers are broadly expected to maintain current rates for the second time in a row, as inflation stays on track.