• 5Y and 10Y breakevens have recently edged lower and are now down -2bps on the day, with flat to higher nominal yields driven by real yields climbing (5Y +2bps, 10Y +5bps).
• It leaves the 5Y and 10Y breakeven at 2.23% and 2.17% respectively, within a handful of basis points off mid-Dec and late-Sep lows that were otherwise last seen in early 2021 [chart top panel].
• Whilst small in absolute terms compared to recent shifts, the day’s relatively small climb in real yields appears to have helped limit the day’s equity rally [bottom panel].

5Y breakeven (yellow), 10Y b/e (white), Fed Funds upper bound (red), real yield (green) and ES1 (purple)Source: Bloomberg