Tips breakevens are driven by liquidity and hedging effects more than inflation expectations (which is why they are highly correlated to anything growthy eg stocks).
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Being less glib — my point is that pricing for literally anything reflects expectations + risk premia + technical effects, and the technical effects for breakevens are massive because tips are so illiquid compared to treasuries.
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they have liquidity discounts in crises like last year. i do not think they are very distorted when liquidity is abundant in the market
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if they aren’t then there would be a pretty easy arb… maybe there is an easy arb idk but there’s a difference between what the price is or represents and the mechanisms by which the market arrives at that price
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They are nowhere near dividend expectations (in fact the curve is almost always backwardated whereas dividend expectations are almost always upward sloping). Try to construct the arb and you will soon figure out why there isn't one.
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