Spain: Rajoy threatens article 155, but doesn’t pull the trigger

This saga isn’t over yet. We can expect Clumsy adaptions on the price for the months to come, but, Rajoy has delivered a statement and has taken the first step in triggering Article 155 of the constitution. 

He will send a letter to the leader of Catalonia’s regional government, informing him, essentially, that the referendum was illegal, and that they are considered to have broken the law and should desist.

It is rumored that the Catalan leader, Carles Puigdemont, will ignore this, and then Article 155 may be properly exercised, which would empower the government in Madrid to suspend the autonomy of the regional government and call new elections.

The FT reports: “If the government uses Article 155 to curtail Catalonia’s powers, it would be a significant escalation of a tense conflict between Barcelona and Madrid that threatens to turn into a severe constitutional crisis”

This could keep the index under pressure to fall to 9.000 level, then when things get more clear we can see a recovery to be built in the years to come.

Trade CodeIBEX35-0001
Stop Loss7.500
Take Profit17.500
CommentsAllow several months for the trade to develop