# Breakeven Inflation

*Macro & Economy — Finicade finance glossary*

Breakeven inflation is the gap between a nominal bond yield and an inflation-linked yield of the same maturity — the market real-time inflation expectation.

Breakeven inflation is the gap between a nominal government bond yield and an inflation-linked bond yield of the same maturity — the inflation rate at which owning either would leave you equally well off. It's the market's real-time inflation expectation, available continuously rather than monthly. It's biased slightly upward by an inflation risk premium and distorted by the linker market's thinner liquidity.

**Formula:** `Breakeven = Nominal bond yield − Inflation-linked bond yield`

**Also known as:** breakeven rate, inflation breakeven, 5y5y forward

**Related terms:** [TIPS (Treasury Inflation-Protected Securities)](https://finicade.com/glossary/tips), [Inflation](https://finicade.com/glossary/inflation), [Fisher Equation](https://finicade.com/glossary/fisher-equation), [Real vs Nominal](https://finicade.com/glossary/real-vs-nominal-interest-rates), [Term Premium](https://finicade.com/glossary/term-premium)

Source: https://finicade.com/glossary/breakeven-inflation