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5Y Breakeven Inflation

What it is

5Y Breakeven Inflation — registry key breakeven_5y.

Classifier metric. See the bands table below for the band-by-band reading.

Data-pyramid tier

T1 — Signal. This metric sits at the signal layer of the platform’s six-tier data pyramid (T0 raw inputs → T5 actionable read). The tier reflects how far the value is from a raw measurement — not how strongly it is validated. Abstraction and validation are separate axes: a higher tier is not a claim of stronger evidence.

Horizon & validation

Horizon: 40-60d — the window this metric’s measured skill speaks to. A horizon stamp is an evidence claim, not a trading signal.

Evidence: Macro drawdown-lens leg: forward-maxdd correlation grows with horizon and peaks at 40-60d (breakeven_10y +0.28@20d -> +0.42@60d; ofr_fsi_funding ~+0.278, highest tested). FAILS clean walk-forward (single 2022 bear, in-sample; RT-3 falsifier open). Weak - ships labeled, never as a standalone forecast.

Source

Source module: inflation
Data source: back_fillable

Fetched directly from app/sources/inflation.py; see source code for the upstream API call and any provider-specific handling.

How it’s computed

Raw 5-Year Breakeven Inflation Rate from FRED series T5YIE, in percentage points (e.g. 2.4 = market is pricing 2.4% annual CPI over the next 5 years). Computed by FRED as 5y_nominal_treasury_yield − 5y_TIPS_yield and published daily. Breakeven 5y is the short-horizon inflation expectation; the stagflation composite (stagflation_score) weights this leg at 40% because near-term inflation surprises dominate the policy-rate path during regime transitions. Daily cadence; rows post-1530 ET reflect today’s market close. See app/sources/inflation.py:53 (_collect — _fetch_fred('T5YIE')). As of the 2026.05 rebalance breakeven_5y is also a scored health-score component (breakeven, max 6, lower-is-better band ladder 6/5/2/0) — a research study found inflation breakevens were the strongest signal in the data while previously carrying zero score weight; 6 points moved here from DIX/GEX. It still renders alongside its 10y / 5y5y siblings on the inflation card.

Where it surfaces

• API field: inflation.breakeven_5y on GET /api/v1/signals/latest
• Surface: daily_signals row (daily-cadence persistence)
• Surface: /signals/sparklines (UI sparklines)
• Surface: change markers in the rendered report

Bands / thresholds

Classifier direction: lower_is_better.

Health-score / alignment role

• Health score component: breakeven (weight + math in app/signals/config/score_weights.json and app/signals/score.py).
• Contributes to: health_score.Breakeven, card.inflation

Release cadence

• Publishes: daily
• Approximate time (ET): 16:30
• Lag days: 1

FRED breakeven series updates business-day after close.

See also

• /kb/health-score — Health score — 0-100 composite.
• /kb/api/get-signals-latest — API endpoint that serves this field.