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Spain to Proceed With Suspending Catalan Autonomy

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Catalan crisis intensifies, tax debate heats up, and U.K. hit by feeble data. Here are some of the things people in markets are talking about today.

Not backing down

Catalan President Carles Puigdemont refused to drop his claim to independence for the region in a letter delivered just ahead of a deadline imposed by Madrid. Prime Minister Mariano Rajoy’s government said it would move ahead with suspending the powers of the regional administration following Puigdemont’s enduring commitment to the declaration. Spanish stocks dropped 0.8 percent as the crisis intensified. 

Fiscal plan

The tax debate in the Senate kicked off yesterday with Republicans winning some key votes against Democrat proposals to curb tax breaks for the wealthy. Senate Finance Chairman Orrin Hatch is still holding out hopes for a bipartisan deal, as both sides seek to help middle-income earners, even as the finance panel’s top Democrat, Ron Wyden of Oregon, said there remains a “a Grand Canyon-sized gap” between the parties’ positions. Treasury Secretary Steven Mnuchin has warned that the U.S. stock rally hinges on Congress passing a tax plan. Even if agreement is reached on the issue, lawmakers face a litany of other battles -- over a wall on the U.S.-Mexico border, immigration, health-care subsidies, Planned Parenthood and storm relief -- as they seek to agree spending legislation to keep the government open ahead of a Dec. 8 deadline. 

Disappointing data

Retail sales in the U.K. dropped 0.8 percent in September, leaving growth in the third quarter at its weakest in four years. The pound dropped 0.5 percent after the print. In Brussels, European leaders are meeting today, and while Brexit is on the menu, it isn’t the biggest talking point as the bloc faces challenges in Spain, in its relations with Turkey, and over the Iran nuclear deal, all while forging a road map for the EU’s future. 

Markets drop

Overnight, the MSCI Asia Pacific Index dropped 0.2 percent, while Japan’s Topix index added 0.3 percent. Hong Kong’s Hang Seng Index saw its largest retreat in almost a year, closing 1.9 percent lower. In Europe, the Stoxx 600 Index was 0.6 percent lower at 5:45 a.m. Eastern Time as disappointing earnings and the Catalan crisis weighed on sentiment. S&P 500 futures fell 0.4 percent, the 10-year Treasury yield was at 2.327 percent, and gold was a little higher. 

Coming up…

Initial jobless claims are expected to decline slightly to 240,000 when the data are released at 8:30 a.m. The Robin Hood investor conference begins today in New York, featuring a who’s who of Wall Street executives on the speaker list. It’s also a big day for Federal Reserve Chair Janet Yellen as she heads to the White House for an interview for the job she already has.

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