The US dollar is consolidating after retreating since reversing lower following the US jobs data at the end of last week. While the greenback has largely been confined to yesterday’s ranges against the major currencies, the euro has made a marginal new high, briefly trading through the $1.1830 area noted yesterday.  

Spanish assets are rallying following Puigdemont’s attempt to square the circle yesterday by deferring the independence announcement, which he claims he is still entitled to make, for a few “weeks” hoping for talks with Madrid. Prime Minister Rajoy has called an emergency cabinet meeting for today, and the outcome can be announced any minute. Although investors are having a collective sigh of relief, Madrid will seek greater closure, but it will likely reject any talks under the threat of secession. If Puigedemont gives up the drive for independence, what political future has he?  

Spain’s 10-year bond yield is off three bp while the comparable yield in Italy is off less than a single basis point, and core bond yields are slightly higher. Spanish stocks are up 1.3%, outperforming all the major bourses today. Telecoms and real estate of leading what is a broad advance. Only consumer staples are lower, and this is due to a sell-off a leading supermarket.  

New revelations from Japan’s Kobe Steel that its deception of its materials extend beyond copper and aluminum to include iron ore powder and an unspecified metal still being investigated, saw its share prices fell another 18% after yesterday nearly 22% decline. Nevertheless, the Nikkei and Topix managed to post minor gains, which were sufficient to lift both to new two-year highs.  

The dollar, which briefly dipped below JPY112 yesterday is trading inside yesterday’s range. On the one hand, this may suggest a bit of resilience on the dollar’s part, as the US 10-year Treasury yield is off nearly two bp (@~2.34%).On the other hand, the dollar has not been able to distance itself from the 20-day moving average, which is near JPY112.20. The dollar has not closed below the 20-day moving average since September 11.A break is seen testing support near JPY111.50.