AWS Transit Gateway peering encryption

Yes, It is encrypted.

Traffic using inter-region Transit Gateway peering always stays on the AWS global network and never traverses the public internet, thereby reducing threat vectors, such as common exploits and DDoS attacks. Inter-region Transit Gateway peering encrypts inter-region traffic with no single point of failure.

Link: https://aws.amazon.com/about-aws/whats-new/2019/12/aws-transit-gateway-supports-inter-region-peering/