The Salvadoran national whose mistaken deportation became a flashpoint in the fight over President Donald Trump’s immigration policies has been in jail since he was returned to the U.S. on June 7, facing two counts of human smuggling.

A federal Judge has ruled that Abrego Garcia has a right to be released and even set specific conditions during a court hearing on Wednesday for him to live with his brother. But Abrego Garcia’s attorneys expressed concern that it would lead to his immediate detention and possible deportation by U.S. Immigration and Customs Enforcement.

U.S. Magistrate Judge Barbara Holmes also expressed doubts during the hearing about her own power to require anything more than prosecutors using their best efforts to secure the cooperation of ICE.

“I have no reservations about my ability to direct the local U.S. Attorney’s office,” the judge said. “I don’t think I have any authority over ICE.”

Holmes did not say when she would file the release order for Abrego Garcia, but it will not happen before Friday afternoon.

Judge: Government dilemma ‘completely of its own making’

Abrego Garcia, who was shackled and wearing a red jumpsuit, was expected to be released Wednesday, if only into ICE custody. But the court hearing revealed instead the competing interests between two federal agencies within the Trump administration.

Acting U.S. Attorney Rob McGuire has said in court and in filings that one of the reasons he wants Abrego Garcia to stay in jail is to ensure that he remains in the country and isn’t deported by ICE.

McGuire told the judge during Wednesday’s hearing that he would do “the best I can” to secure the cooperation of the Department of Homeland Security, which includes ICE. But the prosecutor noted, “That’s a separate agency with separate leadership and separate directions. I will coordinate, but I can’t tell them what to do.”

But Abrego Garcia’s attorney, Sean Hecker, countered that the Department of Justice and Homeland Security are both within the executive branch and seem to cooperate on other things. For example, ICE has agreed not to deport cooperating witnesses who agreed to testify against Abrego Garcia.

Meanwhile, federal prosecutors had tried to stay Holmes’ release order. But it was denied by another federal judge on Wednesday afternoon, who wrote that the government was asking the court to “save it from itself” in a situation that was “completely of its own making.”

U.S. District Judge Waverly D. Crenshaw, Jr. wrote that federal prosecutors should be making their arguments to DHS, not a court, “because the Department of Justice and DHS can together prevent the harm the Government contends it faces.”

“If the Government finds this case to be as high priority as it argues here, it is incumbent upon it to ensure that Abrego is held accountable for the charges in the Indictment,” Crenshaw wrote. “If the Department of Justice and DHS cannot do so, that speaks for itself.”

Crenshaw, however, will allow prosecutors to file a brief in support of a motion to revoke the magistrate’s release order. An evidentiary hearing is scheduled for July 16.

In court on wedding anniversary

Abrego Garcia pleaded not guilty on June 13 to smuggling charges that his attorneys have characterized as an attempt to justify his mistaken deportation in March to a notorious prison in El Salvador.

Those charges stem from a 2022 traffic stop for speeding in Tennessee, during which Abrego Garcia was driving a vehicle with nine passengers. At his detention hearing, Homeland Security special agent Peter Joseph testified that he did not begin investigating Abrego Garcia until April of this year.

Holmes, the magistrate judge, wrote in a ruling on Sunday that federal prosecutors failed to show that Abrego Garcia was a flight risk or a danger to the community. He has lived for more than a decade in Maryland, where he and his American wife are raising three children.

However, Holmes referred to her own ruling as “little more than an academic exercise,” noting that ICE plans to detain him. It is less clear what will happen after that. Although Abrego Garcia can’t be deported to El Salvador — where an immigration judge found he faces a credible threat from gangs — he is still deportable to a third country as long as that country agrees to not send him to El Salvador.

Abrego Garcia’s wife, Jennifer Vasquez Sura, said during a news conference before Wednesday’s hearing that it’s been 106 days since he “was abducted by the Trump administration and separated from our family.” She noted that he has missed family birthdays, graduations and Father’s Day, while “today he misses our wedding anniversary.”

Vasquez Sura said their love, their faith in God and an abundance of community support have helped them persevere.

“Kilmar should never have been taken away from us,” she said. “This fight has been the hardest thing in my life.”

Udio, the AI music startup currently in a legal battle with major record labels alongside its rival Suno, has just released a visual editing workstation for AI-generated music.

The tool called ‘Sessions,’ available Wednesday (June 25) to Standard and Pro-tier subscribers, allows users to manipulate song structures by moving, extending or replacing sections within tracks.

Udio explains in a press release that Sessions automatically identifies musical elements like choruses and bridges from audio waveforms, allowing for the editing of lyrics and sound through a “visual workstation”.

The release comes almost three months after Udio launched two new updates including an AI-powered style reference feature.

The ‘Styles’ feature allows users to generate new music that mirrors the “sonic identity” of existing tracks, while the v1.5 Allegro tool is an update to its existing AI model, which the startup claims is able to deliver “up to 30% faster output with no loss in quality or consistency.”

“We know artists and producers use Udio alongside other tools, often jumping between platforms to shape their sound. We’ve built Sessions to seamlessly integrate into those workflows.”

Andrew Sanchez, Udio

These new features arrive after Sony Music Entertainment, Universal Music Group and Warner Records sued Udio and competitor Suno, alleging both companies trained their AI systems on copyrighted recordings without authorization.

In August last year, Udio and Suno argued that their use of copyrighted materials falls under the “fair use” exemption to US copyright law, and accused the recording companies of launching the lawsuits to prevent competition.

Udio launched publicly in April 2024 with backing from Andreessen Horowitz (a16z), a Menlo Park, California-headquartered venture capital firm, musician will.i.am, Mike Krieger (co-founder and CTO of Instagram) and Oriol Vinyals (VP of Research at Google’s Gemini). The platform was developed by former researchers at Google DeepMind.

Discussing the launch of ‘Sessions’, Andrew Sanchez, CEO and Co-Founder of Udio, said: “Udio is committed to advancing the next generation of creators. We know artists and producers use Udio alongside other tools, often jumping between platforms to shape their sound. We’ve built Sessions to seamlessly integrate into those workflows, making it easier to visualize, edit, and experiment with tracks in one unified place.”

“Sessions is exactly the solution I’ve been looking for to help bring ideas to life with more precision and flexibility.”

Ian Braunstein, Udio

Ian Braunstein, Udio’s Head of Product, added: “As a musician and producer myself, I’m constantly thinking about what tools would be most helpful in my own creative process.”

“Sessions is exactly the solution I’ve been looking for to help bring ideas to life with more precision and flexibility.

Last week, Udio and Suno were slapped with another legal action by country musician Tony Justice, who filed class-action lawsuits against both AI music generators.

Justice argues that while major labels pursue their own infringement cases, independent artists “whose rights have been trampled the most” remain excluded from “the table, unrepresented, and without a meaningful remedy.”

The artist’s complaint states: “Rather than simply license these copyrighted songs like every other tech-based business does, Suno/Udio elected to simply steal the songs and generate AI-soundalike music at virtually no cost to Suno/Udio.”

Music Business Worldwide

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The summer months are a time for taking a break, basking in the sunshine with friends and family, and financial markets going loopy for little or no obvious reason.

As we approach the season in the northern hemisphere and markets start their usual process of thinning out and flapping around, there’s every danger of some kind of flare-up in the coming months. 

An amuse bouche for that came last week with some peculiar movements in the Japanese yen. Generally speaking, the yen is one of the currencies, along with the dollar and the Swiss franc, that performs pretty well in times of stress. It’s not a haven as such, but the folklore in markets is that during turbulent or scary periods, Japanese investors bring home their funds parked in overseas assets, pulling up the yen in tow.

Whether those repatriation flows ever truly happen at scale is a matter for debate. They probably don’t. But muscle memory in markets is a powerful force, so when bad stuff happens, of any flavour but particularly in geopolitics, the yen pushes higher.

Not so with the latest intensification of violence between Iran and Israel, with US involvement too. Instead of shooting higher, the yen weakened. Not dramatically, but the dollar rose to a high of ¥148 by the start of this week, marking the yen’s weakest point in a month.

A one-month low in the yen may not sound like a big deal, and for most people, it was not. The problem here sets in because betting on a weaker dollar, and a stronger yen, is hugely popular among hedge funds and other speculative investors. When that bet started to unravel, we saw what Dominic Bunning, an analyst at Nomura, describes as a “nasty squeeze”. He came close to folding on his own recommendation to clients to buy the Japanese currency — never a pleasant moment for a peddler of ideas at an investment bank.

Crucially, the episode suggests that the bet against the buck is getting a little crowded, and you don’t need a long memory to recall how crowded bets can sour at speed. Just last summer, the yen shot higher and at the same time, US tech stocks shot lower as two highly correlated and highly popular positions at heavy-hitting hedge funds hit a wall and quickly reversed. Markets became so messy (or so I’m told — I had the good sense to sit this bit out on a sunlounger in Turkey) that at one point the debt markets were pricing in an emergency interest rate cut from the US Federal Reserve.

An emergency cut never happened, of course. But markets are particularly prone to overshooting when summer holiday season pulls people away from their desks and gaps start to open up where firm tradeable market prices would usually be.

It is well worth, then, keeping a close eye on areas of widespread consensus in financial markets, in case they suffer similar summer flings. The yen is one such area. If the US is unwilling or unable to cut interest rates, either because of sticky inflation or because the economy performs better than feared in the opening months of this year, the ascent in the yen that hedgies hope for may not materialise. Investment banks and central banks alike are growing less gloomy on the US outlook and this is an upside risk to take seriously.

Chris Scicluna, an analyst at Daiwa Capital Markets, thinks a continued orderly decline in the dollar is still the most likely outcome from here, and that a summer shake-out in its exchange rate with the yen remains unlikely, although this forecast may be, as he noted, his “famous last words”.

Shocks are, by definition, impossible to predict. But Scicluna sensibly points out that a better place to watch might be other pockets of markets that have had a great run so far this year and that might be pushing their luck and getting a little overcrowded.

Some European currencies, for example, like the Swiss franc and the Swedish krona, have had a spectacular run. European stocks have carved out an impressive and uncharacteristic ascent. Even those, like me, who believe in a long-term rotation out of the US and into Europe, can admit that a 18 per cent climb in German stocks just this year is perhaps a little excessive.

Meanwhile, US stocks are plodding in Europe’s wake. If President Donald Trump keeps on chickening out of tough economic decisions, maybe they can catch up and the dollar can catch a break. Sentiment here is possibly overly gloomy. 

Mini-reversals in the summer tend to fade as fast as a tan but you can get burnt in the process. A little summertime caution goes a long way.

katie.martin@ft.com