13.04.202608:27:11UTC+00Italy’s Bond Yields Remain High as Energy Crisis Deepens Inflation Fears

Italy’s 10-year BTP yield held steady at 3.85%, hovering near its highest level in two years, as inflation worries re-emerged following the breakdown of US-Iran peace talks. Washington accused Tehran of refusing to abandon its nuclear ambitions, while Iranian officials rejected what they described as “excessive” US demands. At the same time, US President Trump threatened to blockade the Strait of Hormuz, pushing Brent crude prices higher, heightening fears of an inflation shock, and leading traders to price in nearly three ECB rate hikes by the end of 2026.

Italy, as Europe’s most gas-dependent major economy, is particularly vulnerable to these developments. Natural gas accounts for 38% of its energy mix, and the country is the EU’s largest importer of LNG from the Persian Gulf, making it acutely sensitive to rising energy costs. Political uncertainty ahead of the 2027 elections and lingering fiscal risks have added to the pressure, dampening investor sentiment and overshadowing the otherwise strong performance of Italian bonds in 2025.