Italy’s 10-year BTP yield hovered near 4.50%, remaining near a three-week low as expectations of a rate hike this month eased following remarks by Fed Chair Warsh. ECB President Lagarde noted that there were no signs yet of second-round effects from high energy prices, while markets still expect an ECB hike in December. Despite broader stability in Italy’s risk premiums, Europe’s fiscal concerns persist. Italy’s 2027 draft budget includes tax cuts and spending increases worth 0.98% of GDP, and an additional €10.7 billion contribution from the financial sector in 2027. The budget deficit is seen rising to 3.4% of GDP in 2027 from 2.9% this year, adding to debt sustainability concerns as Italy’s debt-to-GDP ratio is expected to surpass Greece’s this year as the eurozone’s most indebted country. Meanwhile, Premier Meloni raised concerns over the ETS at the European Council as its largest business lobby, Confindustria, warned that its phaseout could weigh on Italy’s growth outlook.