What Changed? | December's CPI looks calm on the surface: inflation holds near the mid-2s, and the month-to-month drama is muted. Yet the market's pricing of inflation risk tells a more nuanced story—one that often moves first and forces other assets to adjust. | The key shift is in how investors are weighting "near-term inflation surprises" versus "long-run inflation credibility." Breakevens and inflation swaps don't just summarize the latest print. They translate uncertainty into a live price—then feed directly into real yields, equity multiples, and credit spreads. | | Investors Are Following Washington's $7B Play | | America is dedicating $7B to boost the domestic supply of precious metals. The real winner? A US startup preparing for commercial lithium production right now, and investors are taking advantage. | EnergyX has been at the forefront of the $546B energy storage market for years, with patented tech that can recover up to 3X more lithium than conventional methods. | Backed by General Motors, POSCO, and Eni, they control approximately 150,000 acres of prime lithium territory across Chile and the US. | In fact, a recent independent study projected its flagship Chilean project alone could generate $1.1B annually once fully operational, at projected market prices. No wonder over 40,000+ people have already invested. | Learn how you can join them today. | *Disclaimer: This is a paid advertisement for EnergyX's Regulation A+ Offering. Please read the offering circular at invest.energyx.com. Under Regulation A+, a company has the ability to change its share price by up to 20%, without requalifying the offering with the SEC. | | The Numbers | CPI-U: +2.7% year over year (December 2025) Core CPI (less food and energy): +2.6% year over year (December 2025) 5-year breakeven inflation: 2.45% (Jan. 26, 2026) 10-year breakeven inflation: 2.32% (Jan. 26, 2026) 5-year, 5-year forward inflation expectation rate: 2.19% (Jan. 26, 2026) 10-year term premium (Kim-Wright model): 0.6219% (Jan. 23, 2026)
| | Why It Matters | Breakevens are a simple spread—nominal Treasuries minus TIPS—but they carry a lot of information. When 5-year breakevens run above 10-year breakevens, as they do now, the market is effectively saying: inflation risk is more intense in the "here and now" than in the long run. | That matters because markets don't wait for CPI confirmation. If near-term inflation compensation rises, real yields can tighten financial conditions even when the headline CPI trend looks steady. At the same time, a positive term premium means investors are demanding more compensation for holding duration risk—so long rates can stay firm even if long-run inflation expectations remain anchored. | Inflation swaps add another layer: they can be cleaner hedges for specific horizons, and research suggests they can be informative about one-year inflation expectations. In practice, swaps and breakevens can diverge when liquidity, hedging flows, or technical factors dominate—exactly the kind of "market plumbing" that won't show up in a CPI table but will show up in asset prices. | | Takeaway | CPI tells you what inflation was. Breakevens and swaps tell you what inflation risk costs right now—and that "price of risk" is often what moves portfolios first. | — Lauren
Editor, American Ledger | Resources | Bureau of Labor Statistics, January 2026
https://www.bls.gov/news.release/cpi.htm | Board of Governors of the Federal Reserve System, January 2026
https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm | U.S. Department of the Treasury (Tentative Auction Schedule), November 2025
https://home.treasury.gov/system/files/221/Tentative-Auction-Schedule.pdf | Board of Governors of the Federal Reserve System (FEDS Note: "The Swaps Strike Back"), 2023
https://www.federalreserve.gov/econres/feds/the-swaps-strike-back-evaluating-expectations-of-one-year-inflation.htm |
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