European equity markets are expected to open a little higher on Wednesday, with Spain’s IBEX a strong outperformer after Catalan leader Carles Puigdemont adopted a softer stance on independence on Tuesday.

While Puigdemont remained clear that they had been given a mandate for independence by the Catalan people, his call for talks in order to find a peaceful resolution was the much preferred option at this stage. A declaration of independence on Tuesday could have led to a chain of events that made the situation much worse and seen Puigdemont arrested, likely leading to more unrest.

It’s now up to Madrid to decide how it is going to handle the situation, starting with whether it will agree to hold talks with the Catalan leadership on the issue. Outside mediation has been rejected by numerous officials including French President Emmanuel Macron who claimed Madrid can handle the situation. While a softer approach has boosted markets in the near-term is a positive, there remains a strong chance that the situation will deteriorate quickly again if Madrid rejects talks and the Catalans are backed into a corner and forced to declare, an outcome that doesn’t seem entirely unlikely given Madrid’s handling of the situation so far.

Developments in Spain are likely to remain the key focal point from a European perspective this morning in the absence of any notable scheduled economic events. The week as a whole is going to be a little quiet on this front, with the only notable event being ECB President Mario Draghi’s appearance at the World Bank and IMF event in Washington on Thursday.

The United States also is in for a quieter week when it comes to economic data but with third quarter earnings season getting underway – including results from Delta and Blackrock today and JP Morgan and Citigroup tomorrow – there should be no shortage of newsflow.

The release of the FOMC minutes this evening is today’s key event, with traders looking for further insight into the Fed’s interest rate plans. The dot plot from the last meeting made it clear that another rate hike this year and three more next year are still expected from within the committee but because the remarks since then from individuals have not been overly convincing and a new Chair may possibly take over early next year, a huge amount of uncertainty remains.