Inflation expectations from the TIPS market have declined slightly for the second consecutive week but remain on the higher end of readings seen during the last two years.
The Barclays 5-year/5-year forward breakeven inflation rate is currently at 2.80 percent, down about 6 basis points (bps) over the past week. But it remains about 35 bps higher than the average daily rate seen between January and August 2012—when expectations consistently fluctuated between 2.3 percent and 2.6 percent.
(Note: The breakeven inflation rate is a measure of expected inflation derived from "nominal" Treasury securities and their "real" counterparts—inflation-protected TIPS securities.)
