Madrid Presented an Ultimatum to the Government of Catalonia

Spanish Prime Minister Mariano Rajoy on Wednesday gave the Catalan government five days to abandon the application for independence. Mariano Rajoy warned that the further steps of the central government in Madrid will depend on the response of Barcelona. The President of Catalonia, Carles Puigdemont, must respond within the deadline, which ends on October 16.

Earlier, Carles Puigdemont, called for a dialogue between the government of Spain and Catalonia to resolve the political crisis in the country. The fact that the Catalan leader refused to immediately proclaim the independence of the region was perceived by the markets as a signal of a weakening of the political crisis in Spain.

After Puigdemont’s speech, Spain's IBEX index rose 1.6%, outperforming the pan-European STOXX 600 index. According to Tradeweb, Spain’s 10-year government bond yield fell by 5 basis points to 1.65%.