BEI = Expected Inflation + Inflation Risk Premium - TIP Liquidity Premium

Gemini prompt: Can you create a graph that compares the inflation risk premium to the TIPS liquidity premium across the past 20 years?

Reminder of the impact of the factors:

BEI= Ynominal​− Ytips

BEI = Expected Inflation + IRP - LP

BEI = Ynominal - Ytips + IRP - LPR

Expected Inflation = BEI - IRP + LP

Expected Inflation = Ynominal - Ytips  - IRP + LP

• ⇧ Increase in IRP results in ⇧ increase of Ynominal and ⇧ in BEI - bad for TIPS investor 😔
• ⇧ Increase in TIP Liquidity Premium results in an increase ⇧ in Ytips therefore a ⇓ decrease of BEI - good for TIPS 😊

Some Links for Different Series:

• 2-Year Expected Inflation (EXPINF2YR)
• 5-Year Breakeven Inflation Rate (T5YIE)
• 10-Year Breakeven Inflation Rate (T10YIE)
• Inflation Risk Premium (TENEXPCHAINFRISPRE)
• Cleveland Fed - Inflation Expectations