5 to 30 year ‘Breakeven Inflation Rates’ paint a different picture than RINF

‘Inflation expectations’ ETF out of phase with most ‘Inflation Breakevens’

Here is what RINF does, per its creator…

ProShares Inflation Expectations ETF seeks investment results, before fees and expenses, that track the performance of the FTSE 30-Year TIPS (Treasury Rate-Hedged) Index.

I am sure the inputs are different, but RINF tracks the St. Louis Fed’s 30yr Breakeven Inflation rate most closely. But even there, per the most recent available data, it’s not a good correlation. Although the shorter Treasury maturities indicate that lingering inflation hysterics are clustered to the long end.

As the 5 year breakeven inflation rate bounces but continues in roll-over mode…

5 year breakeven inflation rate

…the 10yr b/e inflation rate does the same in less dramatic fashion, and…

10 year breakeven inflation rate

…the 30yr b/e inflation rate is not exactly screaming HYPER-INFLATION!!!!

30 year breakeven inflation rate

RINF is ticking new highs.

inflatione expectations etf RINF

I don’t know what the elements to the RINF chart are but it’s a good bet they have more to do with the long end of the Treasury curve where the 30yr is getting beaten like a rented mule as shorter maturities have been firmer (yields weaker) just lately.

All in all, with the ‘whatever the heck RINF is doing’ caveat, it’s not a compelling picture of forward inflation.

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4 thoughts on “5 to 30 year ‘Breakeven Inflation Rates’ paint a different picture than RINF

  1. Do this fund, and other bond funds actually 100% hard track their respective benchmarks, or are they also subject to buying and selling pressure? For example, is TLT an exact representation of the price of holding similar bonds directly, or is it lower than that because of ongoing excessive selling pressure? And is RINF similarly subject to excessive buying pressure?

    1. Scintillatingly interesting questions. How about this; is the whole bond market – like any other market – subject to excessive behavior by over-stimulated sheep?

    1. Yup, I don’t think gold bugs have a corner on the manip or over stimulated momo markets.

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