If you had asked me to structure a bear market trade, a rise in breakevens would have been the bread and butter answer. However, things are starting to get awkward. Breakeven inflation is no longer cheap relative to where the Fed wants inflation to be (and inflation has averaged below where they wanted it for a considerable time). If one is bullish on oil, there is perhaps more room for headline inflation to rise. Otherwise, it will be hard for breakevens to follow the rise in nominal yields (even with a beta of less than one). I think trade structures would need to get somewhat fancier, taking into account the shape of the breakeven curve....Bond Economics
U.S. Inflation Breakeven Did What Breakevens Do
Brian Romanchuk
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