The breakeven inflation rate represents the market’s expectation for average annual inflation over a specific time-period, calculated by comparing the yields of regular U.S. Treasury bonds and Treasury Inflation-Protected Securities (TIPS).
As of November 21, 2025, the 5-year breakeven inflation rate was 2.32%, and the 10-year breakeven inflation rate was 2.24%.
A rising 5-year breakeven inflation rate suggests that short-term inflation expectations are increasing, which could indicate concerns about current inflationary pressures. A rising 10-year breakeven inflation rate, on the other hand, could signal concerns about long-term inflation trends. Both have declined from their recent peaks, flashing a signal that the inflation outlook for the years to come is improving.
