Breakeven inflation rate calculator
The rate at which a nominal Treasury and an inflation-linked one finish level, computed as the ratio it is rather than the subtraction everyone prints, with the risk premium separated from the expectation.
Worked example — Breakeven inflation rate, exact: 2.25%. 4.30% nominal, 2.00% real, illustrative pair
The nominal side, as the Treasury published it
Par yields for Aug 12, 2026, read from the official daily curve. The calculator's "today's 10-year nominal yield" preset loads the 10-year row below straight into the nominal field. The real yield is yours: no TIPS series is collected here, so the page will not pretend to supply one.
- 5-year 4.38%
- 10-year 4.68%
- 20-year 5.24%
- 30-year 5.24%
- Published by the source
- Aug 12, 2026, 12:01 PM EDT
- Retrieved by JMM
- Aug 12, 2026, 9:17 PM EDT
- Freshness
- current, inside the 5-day window JMM applies to this series
- Artifact
- 8fee6e0d0fa95077534cb066d01d75bcfa292bd7a71030ebcf1b00ca34451ce2raw response bytes
- Method
- U.S. Treasury daily par yield curve; reported yield level
Illustrative 10-year pair: The page's own default, round illustrative numbers rather than a quote from any date.
Simulate a holding-period race 3
Carry over 10 years: which bond finishes ahead in purchasing power
| Year | Inflation | Price level | Nominal bond, real value | Linker, real value | Ahead | By |
|---|---|---|---|---|---|---|
| 1 | 2.50% | x1.025 | x1.0176 | x1.0200 | Linker | -0.24% |
| 2 | 2.50% | x1.051 | x1.0354 | x1.0404 | Linker | -0.48% |
| 3 | 2.50% | x1.077 | x1.0536 | x1.0612 | Linker | -0.72% |
| 4 | 2.50% | x1.104 | x1.0721 | x1.0824 | Linker | -0.95% |
| 5 | 2.50% | x1.131 | x1.0909 | x1.1041 | Linker | -1.19% |
| 6 | 2.50% | x1.160 | x1.1101 | x1.1262 | Linker | -1.43% |
| 7 | 2.50% | x1.189 | x1.1296 | x1.1487 | Linker | -1.66% |
| 8 | 2.50% | x1.218 | x1.1494 | x1.1717 | Linker | -1.90% |
| 9 | 2.50% | x1.249 | x1.1696 | x1.1951 | Linker | -2.13% |
| 10 | 2.50% | x1.280 | x1.1902 | x1.2190 | Linker | -2.37% |
Under this path the nominal bond finishes -2.37% against the linker in real terms, with average inflation of 2.50%. The two tie when first-year inflation is 2.25%, found by bisection in 50 steps. With a flat path that crossing rate is the breakeven itself: not a forecast, just the level at which the two prices agree. Both bonds are held to maturity as zero-coupon equivalents. Coupon reinvestment, the deflation floor on the principal of an inflation-linked Treasury, tax on the annual accrual of the inflation adjustment, and any liquidity difference between the two markets are not modelled.
Exact breakeven versus the subtraction everyone reports
In plain English, this compares how one dollar grows in a regular Treasury with how one dollar grows after inflation in an inflation-linked Treasury. The exact relationship is (1 + nominal yield) ÷ (1 + real yield) − 1. Every desk note, data portal, and news story reports nominal minus real instead. At a 4.30% nominal and a 2.00% real yield the two differ by 4.5 basis points, small and not zero, quoted to the basis point by people who computed it to the tenth of a percent.
| Measure | Formula | Rate |
|---|---|---|
| Breakeven, exact | (1 + yn) ÷ (1 + yr) − 1 | 2.255% |
| Breakeven, as universally reported | yn − yr | 2.300% |
Why breakeven inflation is not the same as expected inflation
No. Breakeven is a price: it equals expected inflation plus an inflation risk premium minus a liquidity premium. Reporting it as "the market expects" quietly hands the whole premium to the expectation. Nobody knows the premium exactly, which is why the risk-premium input in the calculator above belongs to the reader rather than to a published series.
| Component | Formula | Example value |
|---|---|---|
| Breakeven, quoted | b = (1 + yn) ÷ (1 + yr) − 1 | 2.255% |
| Risk premium, assumed (net of liquidity) | ρ | 0.40% |
| Expectation, implied | (1 + b) ÷ (1 + ρ) − 1 | 1.848% |
Do not read a moving breakeven as changing expectations. Most of the short-run movement in it is liquidity and risk premium, and during stress the premium moves first and hardest, which is exactly when the "market expects deflation" headlines appear.
Breakeven rate by yield pair
Round nominal yields against round real yields, each cell the exact ratio rather than the subtraction.
| Nominal yield | 1.5% real | 2.0% real | 2.5% real |
|---|---|---|---|
| 3.5% | 1.97% | 1.47% | 0.98% |
| 4.0% | 2.46% | 1.96% | 1.46% |
| 4.5% | 2.96% | 2.45% | 1.95% |
| 5.0% | 3.45% | 2.94% | 2.44% |
What this does not model
Both bonds are treated as zero-coupon equivalents held to maturity, so there is no coupon reinvestment and no path dependence in the return. Not modelled: the deflation floor on the principal of an inflation-linked Treasury, the roughly three-month indexation lag, tax on the annual accrual of the inflation adjustment, seasonality in the reference index, the liquidity difference between the nominal and linked markets, and any credit or convexity effect. Both yields must come from the same maturity and the same day, and par yields quoted on a semi-annual convention are not annually compounded rates.
To check what inflation actually did over a period rather than what a price implies, use the inflation calculator. To see what either bond leaves after tax as well as inflation, use the real after-tax return calculator, and to restate a realised return in purchasing power, the CAGR calculator.
The next question after this one
Real after-tax return calculatorCalculatorA real yield is still taxed on its nominal gain. This is what the TIPS actually leaves after tax and inflation.Open nextOther questions
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