US: Texas Redistricting And Inflation Concerns Dampen Midterm Outlook For GOP
President Donald Trump’s efforts to gain an edge in the 2026 midterms by redrawing Congressional maps in red states took another hit yesterday, with a federal court in Texas blocking a Republican map due to evidence it is "racially gerrymandered."
- Texas Republicans are now looking to the Supreme Court to ensure the map, projected to net Republicans five House seats in 2026, is in place for the Congressional elections. The deadline for electoral candidates to file 2026 paperwork is December 8, giving the Supreme Court under 20 days to rescue the Texas map.
- The Texas decision is compounded by the Republican-controlled state legislature in Indiana resisting pressure from Trump to redraw a map to net three GOP seats. Meanwhile, Democrats have had considerable success in their counter efforts to redraw maps in blue states, with wins in California (+5 seats) and Utah (+1 seat). There is also the possibility of Democrats picking up three new seats in Virginia.
- House Majority Leader Hakeem Jeffries (D-NY) said in an interview that House Democrats will continue to pursue favourable maps, regardless of the Texas outcome: “We are moving full steam ahead. Republican extremists started this gerrymandering fight. We’re going to end it.”
- Marist released an update today showing Democrats with a 14-point lead on the generic Congressional ballot, with 57% of respondents citing concerns over prices. Marist noted: “This is the first time in more than three years that Democrats have had a notable advantage on the congressional generic ballot.”
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SEK: EURSEK Briefly Registers Fresh Session Low
EURSEK briefly registers a fresh session low of 10.9707 before recovering, currently -0.25% today at 10.9791. Initial support is the Oct 7 low at 10.9392, clearance of which would expose the Sep 15 low at 10.9036.
- The krona has outperformed the G10 basket throughout today's relatively subdued session.
- This week’s Swedish data calendar is light, with only September PPI due on Friday.
- That will leave focus on Riksbank speakers, though we don’t expect any policy rate guidance changes. Data since the September decision has supported the case for the policy rate to remain at 1.75% for the foreseeable future. The whole Board will participate in a hearing at the Riksdag tomorrow, with Jansson and Thedéen scheduled to speak on Wednesday.
- Respondents to SEB’s SEK Views survey, released this morning, were “generally positive on SEK drivers going forward”, with “Swedish fiscal policy and the Fed’s monetary policy considered the most positive drivers”…. “Several respondents added comments saying that increased hedging needs and increased supply of Swedish assets, mainly government bonds, are likely to be positive for the SEK going forward".
- On positioning: “Participants’ own SEK positioning has decreased and is close to neutral, while the market is now perceived to be marginally overweight SEK for the first time since 2021.”
BOE APF SALES RESULTS: Only two gilts sold today
- Only two gilts sold today GBP653.9mln of the 1.75% Sep-37 gilt and GBP96.0mln of the 4.50% Sep-34 gilt.
- Maturities around 12 years and 9 years respectively.
- Combined bids for other gilts only totalled GBP364.1mln.
EQUITY TECHS: E-MINI S&P: (Z5) Support Remains Intact
- RES 4: 6850.87 1.618 proj of the Aug 1 - 15 - 20 price swing
- RES 3: 6831.38 2.500 proj of the Aug 20 - 28 - Sep 2 price swing
- RES 2: 6819.25 1.500 proj of the Aug 1 - 15 - 20 price swing
- RES 1: 6766.75/6812.25 High Oct 15 / High Sep 9 and bull trigger
- PRICE: 6746.75 @ 14:40 BST Oct 20
- SUP 1: 6615.80 50-day EMA
- SUP 2: 6540.25 Low Oct 10 and a key short-term support
- SUP 3: 6506.50 Low Sep 5
- SUP 4: 6427.00 Low Sep 2
Recent weakness in S&P E-Minis appears corrective - for now. Price has pierced support at the 50-day EMA, currently at 6615.80, but this support area remains intact - for now. Note that the Oct 10 low of 6540.25 marks the key short-term support. Clearance of this level would undermine a bull theme. Moving average studies remain in a bull-mode position, highlighting a dominant uptrend. The bull trigger is 6812.25, the Oct 9 high.
