Inflation expectations from the TIPS market are at the highest levels since April 2011.
The Barclays 5-year/5-year forward breakeven inflation rate is currently at 2.93 percent, about 50 bps higher than the average daily rate between January and August 2012—when expectations consistently fluctuated between 2.3 percent and 2.6 percent. More recently, expectations are up 5 bps since the January 30 FOMC meeting concluded.
(Note: The breakeven inflation rate is a measure of expected inflation derived from "nominal" Treasury securities and their "real" counterparts—inflation-protected TIPS securities.)
