PRESS ROOM
Sharp increase in US breakeven inflation rates
Thursday 11th February '21
Breakeven inflation rates – which reflect inflation expectations and are calculated as the difference between nominal and real rates – have risen sharply in recent weeks for US Treasuries. Inflation expectations have risen across the entire curve, but the change is even more vivid at the front end. The 1-year breakeven rate has risen from around 2% at the start of this year to over 3.5% as of 10 February. This indicates two things: 1. Markets are expecting a sharp rise in inflation within the next 12 months and 2. Nominal Treasuries which do not provide protection from inflation are coming under pressure.