US Real Interest Rates Rise to Over One-Year High! AI Investment Supports Economic Resilience, Rising Oil Prices Rekindle Rate Hike Expectations

US inflation-adjusted Treasury yields rose to their highest level in over a year, as the dual factors of rising oil prices and continued economic strength reignited market speculation that the Federal Reserve will begin raising interest rates in the coming months.

The yield on 10-Year US Treasury Inflation-Protected Securities rose to approximately 2.3% on Wednesday, the highest level since April 2025. The rise in so-called real yields has enhanced the appeal of the US dollar while increasing the opportunity cost of holding non-yielding assets such as gold and cryptocurrencies, thereby putting pressure on these assets.

This movement reflects investors' belief that the resilient US economy, driven by the artificial intelligence investment boom, will convince Federal Reserve officials that the central bank can tighten monetary policy without impacting growth. Traders increased their bets on a Federal Reserve rate hike before October on Wednesday, as escalating US-Iran tensions pushed oil prices higher and sparked inflation concerns.

Gennadiy Goldberg, Head of US Interest Rate Strategy at TD Securities, stated:

"Rising real rates are being driven by robust growth expectations, as well as market concerns that the Federal Reserve may need to further tighten policy amid escalating conflicts in the Middle East."