Break-Even Inflation Rate
The break-even inflation rate is the inflation rate implied by the difference between yields on nominal Treasuries and Treasury Inflation-Protected Securities (TIPS) of the same maturity.
Example: For a 10-year horizon, the 10-year nominal Treasury yield minus the 10-year TIPS yield yields a break-even inflation rate of about 2.1%, indicating the market prices in roughly 2.1% average annual inflation over the next decade.
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