The yen keeps falling despite huge rescue efforts, and the U.S. is now stepping in to prop it up — bad news for the dollar, U.S. bond markets, and Europe.

• Japan has spent about $130 billion in two months trying to stop the yen from crashing, but it keeps sliding within hours each time.
• Scott Bessent said the yen is badly undervalued, which by extension admits the dollar is overvalued and the move away from the dollar isn't over.
• To help Japan, the U.S. Treasury took the rare step of selling euros to buy yen — throwing Europe's currency under the bus to protect the U.S. bond market.
• If Japan runs out of cash, it may start selling its trillion-plus dollars of U.S. Treasuries, which would push already-high U.S. rates even higher.
• The Iran conflict is keeping oil prices and inflation high, adding more pressure on the yen and on U.S. bonds at the same time.

Outlook: Expect more emergency interventions, but with the yen possibly sliding toward 165 by 2027, the pressure on the dollar and U.S. bonds looks set to keep building.