What the 10-year breakeven inflation rate measures
Subtract the yield on a 10-year inflation-protected Treasury (TIPS) from the yield on a regular 10-year note and you get the breakeven rate: the yearly inflation at which both bonds would pay an investor exactly the same. It is therefore a market-based estimate of expected CPI inflation over the next ten years, averaged here by month from 2003.
How to read this chart
Readings near 2–2.5% are consistent with the Federal Reserve’s 2% target (the breakeven is based on CPI, which tends to run a little above the Fed’s preferred PCE measure). Sharp drops usually happen in crises, when investors dump TIPS and expectations of weak demand take over; sustained climbs above 2.5% signal that markets doubt inflation will return to target.
The latest reading in context
- At 2.35%, the latest reading is below its 5-year average of 2.35% and above its 10-year average of 2.12%.
- Of all 286 monthly readings since January 2003, 72% were lower than today’s and 26% were higher.
- Direction: unchanged over the past month; down 0.03 points over the past six months; up 0.04 points over the past year.
- The highest value on record is 2.88% (April 2022, 4 years ago); the lowest is 0.25% (December 2008, 18 years ago).
- The full history spans 2 US recessions, shaded grey on the chart.
Why it matters
The Fed cares a great deal about expectations: if people and businesses expect high inflation, they set wages and prices accordingly and inflation becomes self-fulfilling. Stable breakevens during an inflation spike, as in 2022, suggest the Fed’s credibility is intact. Investors use the measure to choose between nominal bonds and TIPS.
What moves the 10-year breakeven inflation rate
- Recent inflation data and energy prices
- Confidence in the Fed’s commitment to its 2% target
- Liquidity differences between TIPS and regular Treasuries
- Growth expectations and recession fears
Key moments in its history
- Late 2008Collapsed to near zero as the financial crisis triggered deflation fears.
- Mar 2020Fell below 1% during the pandemic shock.
- Spring 2022Rose to about 3%, a record for the series.
- 2023–2024Settled back between roughly 2.2% and 2.5%.
Inflation Expectations (10-Year) data tables
Average by decade
| Decade | Average | High | Low |
|---|---|---|---|
| 2020s (so far) | 2.22% | 2.88% | 0.99% |
| 2010s | 1.99% | 2.59% | 1.31% |
| 2000s | 2.17% | 2.71% | 0.25% |
Last 12 months
| Period | Value | Change |
|---|---|---|
| Oct 2026 | 2.35% | 0.00 pts |
| Sep 2026 | 2.35% | +0.06 pts |
| Aug 2026 | 2.29% | +0.04 pts |
| Jul 2026 | 2.25% | −0.04 pts |
| Jun 2026 | 2.29% | −0.16 pts |
| May 2026 | 2.45% | +0.07 pts |
| Apr 2026 | 2.38% | +0.04 pts |
| Mar 2026 | 2.34% | +0.04 pts |
| Feb 2026 | 2.30% | −0.01 pts |
| Jan 2026 | 2.31% | +0.07 pts |
| Dec 2025 | 2.24% | −0.03 pts |
| Nov 2025 | 2.27% | −0.04 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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Inflation Expectations (10-Year): questions and answers
How is the breakeven inflation rate calculated?
Subtract the yield on a 10-year inflation-protected Treasury (TIPS) from the yield on a regular 10-year Treasury note. The difference is the inflation rate the market is implicitly pricing.
Is the breakeven rate an accurate forecast?
It is useful but imperfect. It also contains an inflation risk premium and a liquidity premium, so it can understate expectations in crises and overstate them when investors pay extra for inflation protection.
What level does the Fed want to see?
The Fed targets 2% inflation measured by PCE prices. Because CPI typically runs a few tenths higher, a 10-year breakeven of roughly 2.2–2.5% is usually read as consistent with the target.
Where does the data on this chart come from?
From the Board of Governors of the Federal Reserve System. ChartWidgets downloads the series (T10YIE) from FRED, the Federal Reserve Bank of St. Louis database, and checks for new releases every day. The last update was on November 1, 2026.