Market Implied Inflation Expectations Approaching 2015 Lows

The market isn’t foreseeing an inflationary burst going into the new year. TIPS implied breakeven inflation is near 2015 lows across 5-year, 10-year, and 30-year time frames. 5-year breakeven inflation currently sits at 124 basis points, 10-year breakeven inflation is at 150 basis points and 30-year breakeven inflation is at just 170 basis points. Breakeven inflation lows for the year were made in late September and saw a bit of a bounce in the weeks following the low in the stock market. However, 10-year breakeven inflation is now just 9 basis points higher than the September low and 30-year breakeven inflation is just 8 basis points higher.

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