Well, we've come back from the 4-day weekend in Europe, and as European equities test their 2-month lows, we see another strong spike in Spanish yields, which rose to near 6%, and are at their highest levels since December.

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The Rajoy government is attempting to reel in more savings by cutting health and education, but it will depend on regional governments cooperating - a tough order.

From Financial Times: Spain's centre-right government on Monday announced plans to save at least €10bn of public spending by rationalising health and education, in its latest attempt to restore the country's credibility in international markets after last week's delayed 2012 budget.

Luis de Guindos, economy minister, also floated the idea of making those with annual incomes of more than €100,000 pay for public health care services, which are currently free in most parts of Spain.

Let's see how this important story develops the rest of the week and quarter, as I don't see what news or development changes the narrative right now (Spain's austerity drive will create a negative feedback loop for the economy, banks, and sovereign bond market), which should continue to weigh on the EUR.

Here's my take on Spain in our Monday Market Intelligence Briefing: