The US is stepping in to prop up Japan's falling currency, a sign of how much the Iran war is straining the tangled global economy — worrying for markets and US borrowing costs.

• The Iran war pushed gas prices up, and Japan imports almost everything, so it now faces inflation it hasn't seen in decades.
• A weak yen forced Japan toward selling its huge pile of US government bonds, which would drive up US interest rates — so the US bought yen to stop that.
• Japan is one of the biggest holders of US debt, funded by years of near-zero interest rates that let investors borrow cheap yen and buy US stocks, bonds, and Bitcoin.
• Now that Japan has to raise rates to fight inflation, that cheap-money trade is unwinding, hurting both Japanese savers and US markets.
• Treasury Secretary Bessent led the intervention, and Japan says it won't hesitate to keep intervening jointly with the US.

Outlook: Expect more currency intervention and continued pressure on US bond yields and stocks as long as the Iran war keeps inflation high and Japan's rate bind unresolved.