The yield on Italy's 10-year BTP was above 3.45%, but remained close to August 2022 lows touched early in the month, as traders continue to anticipate further monetary policy easing from the ECB.
Italy 10-year BTP remains above 3.45%
Markets have priced in another 25bps cut to the deposit facility rate in December but there is a growing possibility of a more significant 50bps reduction, with odds reaching around 30%. Last week, the ECB lowered rates for the third time this year, citing better control of inflation but worsening economic prospects for the eurozone.
What will the ECB do?
ECB President Christine Lagarde's remarks were interpreted as a downgrade of the economic outlook. Preliminary PMIs for the Eurozone due this week will provide a first update on the bloc's economic performance in October.
