JAPAN: USDJPY Fades Fast Off Highs as Katayama Ups Focus on FX Markets

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.”

ERU6 98.12/98.25cs vs 97.87/97.75ps, bought the cs for 1 in 6k.

Treasury & SOFR options see better call volume carry over from Tuesday, underlying futures firmer- near highs with markets awaiting FOMC minutes from the Oct meeting this afternoon. Projected rate cut pricing look steady to mildly higher vs late Tuesday levels (*): Dec'25 steady at -12bp, Jan'26 at -22.1bp (-22bp), Mar'26 at -33.4bp (-33.1bp), Apr'26 at -41.1bp (-40.1bp).

• SOFR Options:
  • +18,000 SFRZ5 96.18/96.25/96.31 call flys, 0.5 ref 96.1975
  • -2,000 0QZ5/SFRZ6 96.87/97.25 strangle spd 42.5 net/Red Dec over
  • 17,000 0QG5 97.12 calls ref 96.94
  • Block, 3,000 0QZ5 97.50/97.62 call spds 0.5 ref 96.915
  • over 10,000 SFRZ5 96.50/96.62 call spds, 0.25 ref 96.19
  • 1,000 SFRZ5 96.00/96.12/96.31 broken put flys vs. 0QZ5 96.50/96.75 put spds
  • 1,500 0QH6 96.37/96.50/96.75 broken put flys
  • +1,000 0QZ5 96.50/96.75 put spd vs. 2QZ5 96.43/96.68 put spd, 0.0 net flattener
  • 1,000 SFRZ5 96.18/96.31/96.44 2x3x1 put flys ref 96.1875
  • 6,500 SFRF6 96.43 calls ref 96.41
  • 1,000 SFRH6 96.37/96.50/96.62/96.75 call condors ref 96.41
  • 6,000 SFRZ5 96.31 calls, ref 96.1875
• Treasury Options: Reminder, Dec Tsy options expire Friday
  • 15,000 USH6 117/119/122 broken call flys
  • 2,000 FVF6 109/109.25 put spds
  • 20,000 FVF6 111/111.5/112 call trees ref 109-13.5
  • 4,500 TYZ5 114/114.5 call spds, 1 ref 112-28
  • 3,100 TYH6 114 calls ref 112-26
  • 14,000 Thu wkly TY 112.25/112.50 put spds
  • 1,000 TYZ5 113/113.5 2x3 call spds