Markets are increasingly positioning for four additional Federal Reserve rate hikes, as rising bond yields and a firmer U.S. dollar add pressure to bitcoin and gold.

Treasury yields are climbing across the maturity spectrum as investors prepare for a longer period of restrictive monetary policy. CME FedWatch currently points to a 4.75% to 5% federal funds target range by June 2027 as the most likely outcome.

That would require four 25-basis-point rate increases from the current 3.75% to 4% range. The Fed has already delivered a 25-bps hike this month.

The pressure is spreading throughout the Treasury curve. The 20-year yield is nearing 5.5%, pushing the TLT long-term Treasury ETF to record lows below $80. The 10-year yield has climbed above 5.1%, reaching levels last recorded in 2007. Bond yields are also moving higher internationally, with France, Germany, the U.K. and Japan experiencing similar pressure.

Higher yields and dollar strength are weighing on risk assets. The dollar index has risen above 101 and is up 3% this year. Bitcoin has dropped below $83,000 after reaching a local high of $87,500, while gold is trading just above $4,200, down 25% from its January record.

Several forces are contributing to the rise in Treasury yields. U.S. economic activity remains strong, with the S&P Global composite PMI, which tracks manufacturing and services, beating expectations in September and increasing nearly 4.3% to 58.4.

Geopolitical tensions in the Middle East are also complicating the inflation outlook and have contributed to higher oil and diesel prices.

Meanwhile, significant borrowing to finance AI infrastructure is adding to the supply of debt competing with Treasuries for investor demand. Stronger growth, inflation concerns and increased demand for capital are combining to keep upward pressure on yields.

The Japanese yen has weakened against the dollar, with the exchange rate returning to around 159 yen. That reverses much of the yen’s advance toward 153 after reports of U.S. and Japanese intervention last month.

Investors are now watching whether expectations of further Fed tightening will continue to lift Treasury yields and strengthen the dollar.