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Inflation Breakevens Still Drive Tsy Moves Post TIPS Auction

US TSYS
  • 10Y real yields nudge higher after the 5Y TIPS auction tailed but at 1.70% they stay easily within the day’s range (1.65-1.74%) and almost unchanged after yesterday’s 10bp climb - green line below.
  • With nominal yields cranking to fresh post-2008 highs at 4.21%, the result has been inflation breakevens rising solidly (10Y +6bps at 2.5% - yellow line), 10bps higher than Sep 21 FOMC levels and a notable turnaround from a late Sep low of 2.1%.

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