Washington is preparing to cut off any bank or country that helps Iran from the dollar system, a move that could backfire badly on US markets if it hits China.

• Treasury has launched a sanctions campaign against Iran's oil, gold, crypto, shipping, and aviation networks, with dozens of targets in the first wave and no exemptions for allies.
• Scott Bessent said no entity is off limits, including Chinese banks, and hinted a major bank could be named within days.
• The threat cuts both ways: China holds hundreds of billions in US government debt and could dump it, sending borrowing costs sharply higher just as the deficit and interest bill are already out of control.
• US emergency oil reserves are at their lowest since 1982, leaving little ammunition to hold gas prices down if the conflict drags on.
• Every time the dollar gets used as a weapon, more countries shift to China's own payment network, which just hit record volumes.

Outlook: A first big bank sanction could land within the week, and gold plus the Chinese currency look like the main winners either way.