The minutes of the Federal Reserve’s July meeting will be released Wednesday afternoon and all eyes will be on any hints the central bank will begin tapering its bond purchases.

Indeed, Treasury yields have already spiked on expectations the Fed will begin winding down its economic stimulus in September.

Yet one thing is certain: Inflation expectations are not pushing interest rates higher.

This is apparent in the performance of ETFs tracking Treasury Inflation Protected Securities, and the so-called inflation breakeven rate. [Rising Rates and Low Inflation a Toxic Mix for TIPS ETFs]

The breakeven rate is calculated by comparing yields on TIPS to Treasuries of similar duration. If inflation averages more than the breakeven rate over a given time period, then investors would be better off owning TIPS than normal Treasury bonds. When the rate is rising, it means inflation expectations are rising.

The recent jump in Treasury yields hasn’t corresponded with a significant increase in the inflation breakeven rate.

In fact the bulk of 2013 “has been defined factually by falling inflation expectations,” writes Michael Gayed, chief investment strategist at Pension Partners, in a MarketWatch article. “Indeed, U.S. stocks have ignored this, which is itself largely unusual historically.”

Some investors have warned the Fed’s quantitative easing would stoke runaway inflation, but it hasn’t happened.

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