FX.co ★ Italy BTP Yields Dip Amid Global Caution

On Monday, the yields on Italy's 10-year government bonds, known as BTPs, dropped below 3.5%. This trend mirrored the decline seen in global yields as investors braced themselves for a significant week filled with critical economic releases, including Italy’s GDP report for the fourth quarter, and the Federal Reserve's policy announcement scheduled for Wednesday. Although the Federal Reserve is largely anticipated to maintain current interest rates, the market's attention is riveted on its forward guidance, looking for any indications about the timing of potential rate cuts, especially amidst speculation that a more dovish replacement might soon succeed Fed Chair Jerome Powell. Investor sentiment remained cautious due to ongoing geopolitical and trade tensions. Following a stabilization period after President Trump's remark about Greenland tariffs, he has issued a warning that the U.S. might impose 100% tariffs on Canadian imports if Canada decides to pursue a trade deal with China. Meanwhile, Canadian Prime Minister Mark Carney has affirmed that Ottawa currently has no intentions of entering into a comprehensive Free Trade Agreement (FTA) with Beijing.