hurdle

Judge removes one hurdle for Trump mail voting order as states file new challenge before midterms

A federal judge on Wednesday lifted a major obstacle to President Trump’s executive order limiting mail voting, even as Democratic state officials filed a new court challenge with the midterm elections fast approaching.

The fresh round of legal wrangling comes just two days after the Supreme Court handed down a procedural ruling in Trump’s favor, and could mean the issue lands before the high court again before the pivotal contests for control of Congress. The first mailed ballots are set to be sent out next week.

U.S. District Judge Indira Talwani in Boston agreed to lift an order prohibiting the U.S. Postal Service from carrying out Trump’s order for November’s elections. She wrote that she was “compelled” to do so after the Supreme Court’s conservative majority ruled that a similar injunction she granted in a separate case was premature.

Talwani nevertheless said the executive order could unleash “chaos” and referred to it as “likely unconstitutional.”

The administration can now move forward and implement a Postal Service rule published late Friday. It would require states to follow a uniform envelope style for mail ballots and to give the Postal Service a list of voters eligible to receive them. Talwani found on Tuesday that the rule’s issuance technically violated her injunction, but she declined to penalize the administration.

The new lawsuit, filed by about two dozen Democratically controlled states against the U.S. Postal Service, marked a new phase in the high-stakes litigation creating confusion around the midterm elections.

It came after the Supreme Court ruled against them in a separate case, but did not say Trump’s order was legal.

The high court majority found the initial Democratic lawsuit was premature, but that was before the Republican administration issued a rule governing Postal Service delivery of mail ballots. Election officials warn it will be impossible to implement before the first wave of mail ballots are sent out next week.

“Across the country, states are already deep into preparations for the 2026 elections. Now, at the last moment, the federal government is attempting to meddle in those preparations and potentially threaten countless Americans’ right to vote,” New York Attorney General Letitia James, one of 25 Democratic attorneys general filing the lawsuit, said in a statement. “USPS has no authority to decide who can and cannot vote by mail.”

The Trump administration plan faces a third lawsuit originally filed in May in the nation’s capital, though judges there have so far declined to block it.

All previous challenges were filed before the administration published its mail ballot rule Friday night.

White House spokesperson Lauren Bis on Wednesday said the Postal Service’s proposals were “commonsense measures that protect the security of mail-in ballots” and that the administration would continue to work to implement them to boost “the safety and security of our elections.”

The Postal Service said it would not comment because of the pending lawsuit.

National Democrats on Tuesday cited the rule in asking the federal judge in the Washington case to block Trump’s order after he declined to do so last spring, saying the administration at the time had not taken concrete action. In Boston, Talwani also found that the administration had violated a separate injunction she had placed on the Postal Service in drafting the new rule, although she did not take any action against the government.

Talwani had issued the injunction against Trump’s executive order in the prior Democratic state case, which is the one the Supreme Court overturned on Monday. She also issued a second injunction Aug. 11 in a case filed by the League of Women Voters and other voting rights groups, while the Supreme Court was considering the administration’s appeal of the judge’s first order.

Trump has long targeted mail voting, which he falsely blames for his 2020 election loss and is disproportionately used by Democrats as a result of Trump’s condemnations. Since returning to power, Trump has tried to claim authority over election rules, saying he thinks Republicans should “take over” vote counting in Democratic areas.

He issued his first election executive order just months after retaking office, attempting to require documentary proof of citizenship to vote, among other changes. He has also been pushing a sweeping election bill that has stalled in the Senate amid opposition from Democrats and even some within his own party.

Riccardi and Whitehurst write for the Associated Press.

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Japanese Rate Hikes Present a Hurdle for Corporate Bond Issuers

Accelerating yield hikes fuel capital repatriation, threatening to drive up USD debt issuance costs.

Japan’s rapidly rising interest rates are providing another significant variable for corporate treasurers with upcoming bond offerings or refinancings to monitor.

While the deluge of debt issued by so-called hyperscalers has yet to increase other companies’ borrowing costs, it’s critical for treasurers to track it alongside another recent development: rapidly rising Japanese interest rates.

The Japanese government and private investors hold $1.2 trillion of U.S. federal debt, more than any other country, according to the Congressional Research Service, and they are major investors in U.S. corporate bonds. Three years ago, the 10-year Japanese government bond rate was close to zero, as it had been for decades, prompting Japanese investors to seek yield abroad. The rate began increasing in 2022 and has nearly doubled over the past year, approaching 2.9% by mid-August.

Lotfi Karoui, a multi-asset credit strategist at PIMCO, noted in an Aug. 3 report the accelerating reduction in U.S. Treasury purchases by non-U.S. public and private sector entities. The best evidence of that trend is Japan, he wrote, where Bank of Japan (BoJ) data show government and private Japanese investors becoming net sellers of long-term U.S. debt securities in the 12 months leading up to May 31, following three years as net buyers.  

There is little evidence so far of a “sell America trade,” Karoui said, and demand for U.S. corporate credit remains strong. But issuers may have to pay more for it.

The U.S. federal government must fund a record deficit, and investment-grade corporate issuance in August, typically a slow month, is setting records.

“If Japanese investors are also selling U.S. securities into the market, that’s a lot of selling pressure that could push up U.S. rates,” said Amol Dhargalkar, senior managing director at Chatham Financial, which advises corporates on debt and hedging strategies. U.S. issuers, he added, could see wider spreads on top of a higher benchmark rate.

One indication of further retrenchment by Japanese investors, Dhargalkar said, would be more non-Japanese issuers pursuing yen offerings to take advantage of growing demand for yen-denominated securities. Alphabet and Berkshire Hathaway recently completed large yen offerings, and he anticipates more, especially from companies with Japanese operations that can avoid costly currency hedges.

Another wrinkle is the intervention starting in late July by the Japanese and U.S. governments to counter the yen’s dramatic weakening against the U.S. dollar by selling dollars and buying yen. Further yen appreciation will likely require more rate hikes by the BoJ, according to Aug. 5 commentary by Fitch Ratings, prompting even more yen repatriation.

“This is one of many new avenues that CFOs and their finance teams have to make sure they’re looking at as they consider capital markets transactions,” Dhargalkar said.

John Hintze is a contributing writer based in the U.S.

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