US equities were largely unchanged yesterday whilst their European counterparts underperformed as the instability in Catalonia is beginning to have negative spillover effects on European risk assets.
USD remained strong against G10 peers overnight after having gained support from US non-manufacturing ISM printing at 59.8 – a 12-year high – yesterday afternoon.
The differential between the Spanish 10y government bond yield and its German counterpart has now widened by around 15bps since last Friday’s close. The Catalan President, Carles Puigdemont, has said that he will declare independence from Spain in a matter of days.
AUD was the clear underperformer overnight falling more than 0.5% after retail sales came in at
-0.6% m/m (Consensus: 0.3% m/m), the weakest print since 2013.
In the UK, despite PM May laying out a range of new policies in her keynote speech, media attention largely fell on the fact that she struggled to deliver her key note speech due to a heavy cold and that she was interrupted midway by a prankster handing her a fake P45 note.
May reportedly came under criticism by some Conservative MPs following the speech whilst many others, including Boris Johnson and Michael Gove, rallied round her.
UK Services PMI came in stronger than expected for September yesterday which lifted GBP in the morning session but gains against USD and EUR were erased in the afternoon.