IRAN: “IRAN'S FARS SAYS IRGC STOPPED TWO TANKERS FROM PASSING THROUGH [...]

Progressives scored wins in Colorado’s Democratic midterm primary elections, with democratic socialist Melat Kiros ousting 15-term Representative Diana DeGette (D-CO) in Denver and state AG Phil Weiser defeating moderate Senator Michael Bennet (D-CO) in the gubernatorial primary. Manny Runnel, a progressive state rep, also defeated moderate Shannon Bird in Colorado’s tightest swing district. However, Senator John Hickenlooper (D-CO) held off a progressive challenger in the Senate primary.

• There are concerns amongst the Democratic establishment that the shift to the left, part of a broader debate on the post-Biden direction of the party, could impact Democrats’ chances of flipping the Senate in November, with a recent NYT/Siena College survey in Maine appearing to support Senate Minority Leader Chuck Schumer’s (D-NY) argument that moderate candidates could better appeal to the median voter.
• The Times notes “many voters” said progressive Maine nominee Graham Platner, a political novice facing allegations of personal misconduct, “lacks the background to be an effective senator.”
• The next tests for the left are the Michigan primaries on August 4 and the Wisconsin primaries on August 11, both swing states where left-wing populists are challenging moderates in statewide races. The Michigan Senate primary will be closely followed, as it is one of the “core four” races that Democrats must win to flip the upper chamber.   
• While Democrats are still slightly favoured to sweep Congress, a Democratic House/Republican Senate has firmed in recent weeks, with Republican prospects in the Senate improving, per Polymarket.

Figure 1: Balance of Power: 2026 Midterms

Source: Polymarket

• The EFSF's RfP suggests that there will be a transaction next week (likely Monday or Tuesday).
• The EFSF has already raised E14.0bln of its E18.0bln funding target this year, so the maximum size of the transaction would be E4.0bln.
• We pencil in a E1-3bln transaction (looking for E2.0-2.5bln as most likely), although we don't rule out a E4.0bln transaction completely. A smaller transaction than the maximum size would still leave a window for either a USD syndication (which we have pencilled in for late August / early September) or a September / October transaction.
• We don't think there are imminent needs for the EFSF to raise too large a sum now, it is more about keeping market access consistent through the year and funding at favourable times if possible.

• Deutsche Bank note that while USDJPY rising to historically high levels is certainly notable, the scale of the move has actually been quite modest and one-month realized volatility has been around multi-decade lows. With cross-yen basically unchanged for months now, Japan policymakers may be sitting back and hoping for dollar strength to cease.
  • DB note the speed of the rise is modest, but yen shorts have grown per the IMM data and there’s a fundamental overshoot. Given this, along with the level of yen and likely concern of policymakers, the risk is that yen strengthens.
• MUFG also state that with USDJPY volatility still relatively low, the JGB market relatively stable for now and equities at record highs, allowing a slow grind higher could well be the MoF strategy for now. There is always a risk in low-liquid market conditions on Friday when the US is on vacation that you could see intervention especially if the pace of yen selling was to pick up. The current pace of yen selling appears acceptable and if maintained could see the MoF remain on the sidelines.
• ING note Japanese authorities will appreciate that intervention can only try to slow, not reverse, the current USDJPY bull trend. A reversal would require not only some dramatic BoJ rate hikes, but also a turn in the broad dollar trend – the latter something for much later in the year once current Fed hawkishness has run its course.