AMERICAS OIL: US Policy Proposes Adding Oil Products to SPR Requirements

Secured rates ticked up yesterday as expected. SOFR rose 5bps to 4.01% and TGCR rose 4bps to 3.97%. That sees the SOFR/IORB spread up to a 16-session high of 11bps. Pre-Thanksgiving month-end dynamics, Treasury bill/coupon settlements and the removal of GSE cash have contributed to the increase in funding pressures this week.

• After $10.6bln of take-up yesterday, NY Fed SRF usage was another $14bln this morning.
• The effective Fed funds rate meanwhile was unchanged at 3.88%.
• SOFR/Fed funds futures price in an easing of funding pressures going forward, aided by the ending of Fed QT as of next Monday, and the introduction of reserve management purchases (likely in bills) from next year.
• TD securities write that “we expect the Fed to buy approximately $15-20bn/month in Treasury bills via reserve management purchases in addition to about $15-20bn/month of MBS reinvestments into bills. This will take the Fed from one of the largest "sellers" of Treasuries in recent years to one of the largest buyers starting in 2026”….”While not QE since reserve management purchases will simply keep reserves steady relative to GDP, markets may react positively to Fed purchases as they allow Treasury to issue more bills in the coming years”.

The Supreme Court is expected to announce a ruling any day now on a GOP-drafted congressional map that could net the party up to five new House seats in 2026. A SCOTUS decision to overturn a lower court block on the map is likely before the Dec. 8 filing deadline for candidates in Texas.

• Axios notes, “An anticipated ruling would mark the high court's first word on the redistricting wars that have defined the 2026 cycle. It wouldn't be the last: Lawsuits are anticipated from California to North Carolina...”
• Meanwhile, Punchbowl reports, “Indiana State Senate President Pro Tempore Rodric Bray said he’d bring the chamber back into session Dec. 8 to ‘make a final decision that week on any redistricting proposal sent from the House... The Indiana House will likely pass the redistricting proposal. Bray seems to realize he can’t ignore it. There will be tremendous pressure on Indiana Senate Republicans to pass the map.”
• Trump, who has engaged in a major pressure campaign against Indiana Senate Republicans who blocked redistricting, wrote on Truth Social, “I am glad to hear the Indiana House is stepping up to do the right thing.”
• The Cook Political Report writes that if Democrats’ redistricting push in Virginia succeeds, they could erase or overtake Republican gains in red states. Semafor notes, “It’s far from certain that Democrats will redraw the Virginia congressional map in time for 2026... But the prospect raises the stakes for Republicans [in Texas].”

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