Breakeven inflation
Definition · Level 7 · Futures, rates & macro
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Nominal Treasury yield minus the TIPS yield of the same maturity, i.e. the inflation rate at which both earn the same. A rough gauge of inflation expectations, blurred by risk and liquidity premia.
Example
10y 4.30% − 10y TIPS 1.95% = 2.35%.
Where Tradecraft teaches it
Level 7 · Futures, rates & macro, in the lesson “The Fed, policy rates & the curve”: Fed funds, FOMC, dots, hawks and doves, QE/QT, repo and SOFR, real yields, and reading the yield curve.
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