Economy

TIPS Yield, Inflation Breakeven and Dollar Rise

Consistent with expansionary fiscal policy plus tariffs hitting a non-passive Fed reaction function.

Figure 1: TIPS constant maturity 5 year yield (blue), five year breakeven (Treasury minus TIPS) (red), both in %. Red dashed line at election. Source: Treasury via FRED.

The breakeven rises by 11 bps since election day.

Figure 2: DXY dollar index (blue), Fed broad dollar index (tan), both normalized to 10/14/2024=1.. Red dashed line at election. Source: Fed via FRED, Tradingeconomics.com.

The dollar index is up 2.4% since election day.

 


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