This is a good day to explain how specific TIPS breakeven inflation rates are calculated. 1/
For any given TIPS, the breakeven rate is normally the difference between its yield and the yield of the nominal Treasury with the closest maturity date. 2/
For the 5-year TIPS sold at auction yesterday, that's currently the on-the-run 5-year (0.875s of Sep26). After next week's auction of nominal 5s, the Oct26 will probably (it's up to the market) become the comparator, because it'll be closer. 3/
For the old 5-year TIPS (the 0.125s of Apr26), the comparator is the nominal 0.75s of Apr26. /4
There's even an index of Treasuries that are comparators for TIPS, for measuring relative performance. /END
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