10-Year Breakeven Inflation Rate — Historical Chart
T10YIEThe 10-year breakeven inflation rate is the bond market's expectation for average CPI inflation over the next decade — derived from the gap between nominal and TIPS yields. A rise signals unanchored long-run inflation expectations.
Related — Monetary Policy & Interest Rates
SOURCE: FEDERAL RESERVE ECONOMIC DATA (FRED) · 0 OBSERVATIONS
The 10-year breakeven inflation rate is the bond market's forecast for average CPI inflation over the next decade. It is derived from the yield difference between nominal 10-year Treasuries and 10-year TIPS (Treasury Inflation-Protected Securities). When it rises, bond markets are pricing in higher future inflation.
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Frequently Asked Questions
- What is the breakeven inflation rate?
- The breakeven inflation rate is the average annual inflation rate at which an investor would earn the same return from a nominal Treasury bond as from a TIPS (inflation-protected) bond. If actual inflation exceeds the breakeven, TIPS outperform; below the breakeven, nominal Treasuries win.
- Why do investors watch breakeven inflation?
- Breakeven inflation reflects the aggregate view of the most sophisticated, largest bond market participants about future inflation. When it rises above the Fed's 2% target, it signals markets doubt the Fed's ability to control inflation — often prompting more aggressive tightening.
- What is the difference between 5-year and 10-year breakeven rates?
- The 5-year breakeven reflects near-term inflation expectations. The 10-year reflects longer-run expectations. When the 5-year runs significantly above the 10-year, markets expect a temporary inflation spike that will eventually revert — a situation consistent with supply shocks.
- Can breakeven inflation be negative?
- During deflationary scares (like the 2020 COVID shock), breakeven rates can briefly turn negative as investors price in sustained deflation. The Fed buying TIPS aggressively through QE programs typically pushes breakevens back up toward the 2% target.
Economic data sourced from the Federal Reserve Bank of St. Louis (FRED). Data is updated according to the release schedule of the issuing agency. Provided for informational purposes only and does not constitute investment advice.