The latest yield on the US 10-year Treasury Inflation-Protected Securities (TIPS) has touched 2.622%, the highest level since 2008. Meanwhile, according to Iran’s state television (IRIB), Yemen’s Ministry of Foreign Affairs issued a stern warning, saying that Saudi Arabia carried out 300 airstrikes over the past five days. It warned that Saudi Arabia would be making a huge mistake if it believes its shipping routes can still remain safe, as geopolitical tensions in the Middle East have once again tightened.
Real interest rates are often viewed as the “anchor” for global asset pricing. When the 10-year TIPS yield breaks above the 2008 high, it implies that the global risk-free real return rate is rising rapidly, and the overall macro liquidity environment is in an extremely tight condition. This not only undermines the market’s previously overly optimistic expectations that the Federal Reserve would quickly turn more dovish, but also suggests that the coexistence of sticky inflation and a high-interest-rate environment may persist far longer than the market can withstand, amid repeated geopolitical disruptions on the energy supply front.
From the perspective of traditional financial markets, rising real rates will put heavy valuation pressure on the valuation of risk assets such as US stocks. With dollar liquidity continuing to flow back into cash and cash-like assets, global commodities and supply chains also face the shock of a second round of inflation returning under the shadow of geopolitical conflicts. The logic of asset pricing is undergoing a harsh restructuring, and the process of deflating frothy valuations for overvalued assets is likely not yet finished.
For the crypto market, the surge in risk-free real yields directly suppresses
$BTC and the broader ecosystem from a liquidity perspective. In an environment where macro capital costs remain high and geopolitical risks occur frequently, institutional funds are more inclined to pull back and seek safety rather than take on volatility. In the near term, crypto assets may continue to face valuation discounts and deleveraging pressure. Investors should be alert to the risk of further pullbacks triggered by liquidity contraction.
#MacroEconomics #TIPS #Geopolitics