Inflation Break-Even Rate
The inflation break-even rate is the market-implied average inflation rate over a specified horizon, derived as the difference between the yield on a nominal U.S. Treasury and the yield on a Treasury Inflation-Protected Security (TIPS) of the same maturity.
Example: For example, if the 10-year nominal Treasury yield is 4.0% and the 10-year TIPS yield is 0.9%, the 10-year inflation break-even rate would be about 3.1% per year.
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