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For readers who are not familiar with the concept of breakeven inflation, it is the nominal yield on a conventional Treasury bond less the quoted yield (indexed, or "real yield") on a matched maturity inflation-linked Treasury (TIPS). I discuss the mechanics of breakeven inflation in my handbook, Breakeven Inflation Analysis. The key observation is that the breakeven inflation rate is (roughly) equal to the required rate of inflation for the TIPS and conventional bond to have the same rate of return when held to maturity -- that is, the TIPS is priced at a break even level versus the nominal benchmark....Bond Economics Recovery In U.S. Inflation Breakevens Not SurprisingBrian Romanchuk
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For readers who are not familiar with the concept of breakeven inflation, it is the nominal yield on a conventional Treasury bond less the quoted yield (indexed, or "real yield") on a matched maturity inflation-linked Treasury (TIPS). I discuss the mechanics of breakeven inflation in my handbook, Breakeven Inflation Analysis. The key observation is that the breakeven inflation rate is (roughly) equal to the required rate of inflation for the TIPS and conventional bond to have the same rate of return when held to maturity -- that is, the TIPS is priced at a break even level versus the nominal benchmark....Bond Economics Recovery In U.S. Inflation Breakevens Not SurprisingBrian Romanchuk
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Mike Norman considers the following as important:
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For readers who are not familiar with the concept of breakeven inflation, it is the nominal yield on a conventional Treasury bond less the quoted yield (indexed, or "real yield") on a matched maturity inflation-linked Treasury (TIPS). I discuss the mechanics of breakeven inflation in my handbook, Breakeven Inflation Analysis. The key observation is that the breakeven inflation rate is (roughly) equal to the required rate of inflation for the TIPS and conventional bond to have the same rate of return when held to maturity -- that is, the TIPS is priced at a break even level versus the nominal benchmark....Bond Economics
Recovery In U.S. Inflation Breakevens Not Surprising
Brian Romanchuk