The U.S. 10-year real yield rises to a one-year high as strong economy and increase in oil prices spark speculation of interest rate hikes.

After adjusting for inflation, the yield on U.S. Treasury bonds has risen to its highest level in over a year, driven by a combination of rising oil prices and a still strong economy, once again sparking speculation in the market that the Federal Reserve will begin raising interest rates in the coming months. The yield on the 10-year U.S. Treasury Inflation-Protected Securities rose to about 2.3% on Wednesday, its highest level since April 2025. The increase in real yields has strengthened the attractiveness of the U.S. dollar, while also raising the opportunity cost of holding non-interest-bearing assets like gold and cryptocurrencies, putting pressure on these assets. This trend reflects investors' belief that the resilient U.S. economy, driven by the artificial intelligence investment boom, will convince Fed officials that the central bank can tighten monetary policy without adversely affecting growth. Traders increased bets on the Fed raising rates before October on Wednesday, as tensions between the U.S. and Iran escalated, pushing up oil prices and sparking inflation concerns. Gennadiy Goldberg, head of U.S. interest rate strategy at TD Securities, stated, "The rise in real rates is driven by robust growth expectations and market concerns that the Fed may need to further tighten policy as tensions in the Middle East escalate."