Long-Term Breakeven Inflation Rates and Federal Reserve Treasury Market Actions: 2018–2024
Abstract
We examine how Federal Reserve actions in Treasury markets shaped market-based measures of long-term inflation expectations from 2018 through 2024. Using daily breakeven inflation (BEI) rates at five- and 10-year horizons, we compare QE4 with the periods immediately before and after. During QE4, BEI exhibited heightened volatility and a breakdown in the usual correlation between nominal and real yields. Fed purchases of nominal Treasuries significantly reduced BEI, while TIPS purchases raised it. These effects are robust across data frequencies, indicating that BEI during QE4 reflected Federal Reserve balance sheet composition rather than solely market-driven expectations.
Fields of Study & Subjects
Monetary Policy and Economic Impact
Fiscal Policies and Political Economy
Market Dynamics and Volatility
Publication details
- Journal / source
- The Journal of Fixed Income
- Publisher
- With Intelligence LLC
- Volume
- 36
- Issue
- 1
- Pages
- 80–104
- Publication date
- 16 May 2026
- Language
- EN