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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wouldn’t really be an arb, you’d just be making a bet that (for instance) divs will grow rather than decline over time. but unless there are clear pathologies in the market i think it’s hard to say that market prices (eg dividend swaps) don’t reflect market expectations.
You can make that bet (i.e. buy dividend futures priced below expectation) and you will be right most of the time, but you are just taking on a bunch more exposure to stocks (i.e. the times you are wrong and divs fall will coincide with big stock market crashes)
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I think we’re just using the word “expectation” differently…. imo markets can define an expectation about the future even when no market participants actually have that expectation.
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