The deadline for Catalonia to provide clarity on independence declarations has come and gone. In the eyes of Madrid the lack of a response was the same as maintained Catalonia demand for independence. Rajoy and the Spanish government have been unwilling to take their feet off the petal. The prime minister office stated that would meet to activate Article 155 of the constitution regardless. Article 155, although untested is expected to suspect Catalonia autonomy. EURUSD dropped immediately to 1.1770 before rallying right back. Despite the growing political crisis in Catalonia, as the regional feels even more directionless, market expect that Spain and EU will prevail. The faith in a dominate federalist system has limited political risk spillover into FX, yields or volatility. The situation remains fluid, with the next move likely to come from Catalonia regional government. However, we remain skeptical of any contagion given the strength of Europe and would fade headlines.