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Breakeven rate

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Breakeven rate
The difference in yield between inflation-protected and nominal debt of the same maturity. If the breakeven rate is negative it suggests traders are betting the economy may face deflation in the near future.


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The 10-year breakeven rate, which measures the difference between the yield on conventional 10-year French government bonds and that on comparable inflation-linked bonds, rose to 2.
Breakeven rates are important because they represent the average inflation rate which must be exceeded over the remaining life of an inflation-linked bond for an investor to make more of a profit than would have been made from buying an equivalent conventional bond.
 
 
 
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