Inflation breakevens continue to rise

5-year highest since 2013

Chart of the Day

Inflation breakevens (i.e. the difference between nominal and real return bonds) have continued to rise in recent weeks, with the 5-year hitting an 8-year high of 2.36%. That doesn’t literally mean markets expect inflation of 2.3% over the next 5 years, as that rate also includes various risk premiums, but the move in inflation swaps have been similar. A potentially even more interesting development is that the 5-year breakeven rate is now higher than the 5-year/5-year rate (i.e. for 2026-30). That could be a sign traders believe the Fed will be happy to see inflation average above 2% in the coming years.


In Germany, industrial production is almost back to where it was a year ago - though production fell throughout much of 2019 as well.

In Canada, the OECD leading indicator is the strongest 2010.

The Economy Watchers Survey points to poor growth in Japan.


The big move yesterday of course was in bitcoin, which jumped over 20% as Telsa disclosed a huge purchase.

Oil prices continue to rise this week, with Brent now back above $60.

That helped drive an outperformance of the Canadian TSX, which is now doing better than the DAX in terms of its performance since 2020.

Likewise, the S&P 500 energy sector was the top performer there.

One of the best performers, even globally, was in fact the small-cap Russell 2000 index. Its now up by almost 40% since the start of 2020.

After underperforming for much of 2020, platinum prices have been outperforming since November. That might be tied to increased hopes of demand related to green technology and electric vehicles.

Like what you see? Please forward this email to your friends and colleagues, or use the button below to share it on social media. They can also follow us on Twitter @macro_daily.