Breakevens are the cleanest market-based reading of inflation-expectations because real money is on both sides. If the 10-year note yields 4.20% and the 10-year tips yields 1.90%, the 10-year breakeven is 2.30%.
Above that rate, TIPS win; below it, nominals win. Traders watch breakevens rather than survey data because they update every second and they feed straight into what the fomc is likely to do.
Example: 5-year nominal at 4.05%, 5-year TIPS at 1.75%, breakeven 2.30%. An oil shock lifts the breakeven to 2.60% while nominal yields barely move, which tells you the selloff is an inflation story rather than a growth story.
Related: tips, real-yield, nominal-yield