What the 5-year breakeven inflation rate measures
The 5-year breakeven rate is the yield on a regular 5-year Treasury note minus the yield on a 5-year inflation-protected Treasury (TIPS). It is the average yearly CPI inflation at which both bonds would pay the same, so it shows what bond investors expect inflation to average over the next five years. Monthly averages of daily data from 2003.
How to read this chart
Compared with the 10-year breakeven, the 5-year rate is more sensitive to current inflation and oil prices, so it swings further in both directions. Readings around 2–2.5% fit the Fed’s 2% target; sharp drops point to recession or deflation fears, and sustained climbs to worries that high inflation will last.
The latest reading in context
- At 2.40%, the latest reading is below its 5-year average of 2.44% and above its 10-year average of 2.12%.
- Of all 286 monthly readings since January 2003, 79% were lower than today’s and 20% were higher.
- Direction: up 0.04 points over the past month; down 0.20 points over the past six months; up 0.04 points over the past year.
- The highest value on record is 3.41% (March 2022, 4 years ago); the lowest is −1.40% (November 2008, 18 years ago).
- The full history spans 2 US recessions, shaded grey on the chart.
Why it matters
It is one of the quickest market reads on whether a burst of inflation is expected to persist. The Fed watches it alongside surveys of households and forecasters, and investors use it to choose between regular Treasuries and TIPS.
What moves the 5-year breakeven inflation rate
- Recent CPI readings, especially energy prices
- Expected Fed policy
- Recession risk
- Liquidity of TIPS compared with regular Treasuries
Key moments in its history
- Late 2008Turned negative as investors sold TIPS and feared deflation.
- Mar 2020Fell well below 1% in the pandemic panic.
- Early 2022Rose above 3%, a record for the series, as inflation surged.
5-Year Breakeven Inflation Rate data tables
Average by decade
| Decade | Average | High | Low |
|---|---|---|---|
| 2020s (so far) | 2.28% | 3.41% | 0.67% |
| 2010s | 1.73% | 2.31% | 1.08% |
| 2000s | 2.00% | 2.88% | −1.40% |
Last 12 months
| Period | Value | Change |
|---|---|---|
| Oct 2026 | 2.40% | +0.04 pts |
| Sep 2026 | 2.36% | +0.10 pts |
| Aug 2026 | 2.26% | 0.00 pts |
| Jul 2026 | 2.26% | −0.11 pts |
| Jun 2026 | 2.37% | −0.25 pts |
| May 2026 | 2.62% | +0.02 pts |
| Apr 2026 | 2.60% | +0.04 pts |
| Mar 2026 | 2.56% | +0.11 pts |
| Feb 2026 | 2.45% | +0.06 pts |
| Jan 2026 | 2.39% | +0.11 pts |
| Dec 2025 | 2.28% | −0.07 pts |
| Nov 2025 | 2.35% | −0.01 pts |
Monthly values. Decade figures are averages of the monthly values in each decade. The complete history is available as a CSV file.
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5-Year Breakeven Inflation Rate: questions and answers
How is the 5-year breakeven calculated?
Subtract the 5-year TIPS yield from the 5-year nominal Treasury yield. The result is the inflation rate the market is pricing for the next five years.
Why is it more volatile than the 10-year breakeven?
Five years is a short enough horizon that today’s inflation, especially gasoline prices, has a large effect on the average, and TIPS can become hard to trade in a crisis, which distorts the spread.
Where does the data on this chart come from?
From the Board of Governors of the Federal Reserve System. ChartWidgets downloads the series (T5YIE) from FRED, the Federal Reserve Bank of St. Louis database, and checks for new releases every day. The last update was on November 4, 2026.