Italy 10-Year Gilt Yield Edges Higher

Italy's 10-year bond yield increased slightly, approaching 3.57%, aligning with other European counterparts, driven by favorable PMI figures from the Eurozone despite challenges posed by US tariffs. The composite PMI climbed to 51.1 in August, surpassing expectations, with manufacturing witnessing its first growth since June 2022 and marking the highest level in 38 months. Although inflationary pressures have escalated to some extent, they remain below historical averages. This positive economic data bolsters the European Central Bank's (ECB) stance against rushing into further rate cuts, following eight reductions since 2024. However, the market still anticipates a 45% probability of another cut by the year's end. ECB President Christine Lagarde commented that the 15% US tariff on EU goods surpassed baseline projections but was still distant from the worst-case scenario. Attention is now focused on the Jackson Hole symposium and Federal Reserve Chair Jerome Powell’s speech on Friday for indications regarding future policy direction.