Trading on inflation

What is inflation and why should you trade it?

Inflation is, essentially, the increase in the price of products and services in an economy – it’s measured using a consumer price index (CPI). Keeping inflation levels down is typically the responsibility of a central bank, such as the US Federal Reserve or an equivalent body. Inflationary changes can have a huge impact on the value of a currency, consumers’ purchasing power and banks’ monetary policies.

US inflation is set to be a hot topic for the year ahead as the long-term effects of the pandemic continue to play out and the Federal Reserve look to pull their key policy levers to manage inflation targets throughout 2022.

By trading our US Inflation Index you can speculate directly on the movement of the inflation, or you can trade inflation as a hedging strategy against assets impacted by it, such as stocks and bonds. Hedging is the act of strategically placing trades so that a profit or a loss in one position, is offset by changes to the value of another.

How to trade inflation

You can now get exposure to US inflation with our unique US inflation index, which you won’t find anywhere else. With us, you’ll take a position using a CFD, which means you can go long or short and trade on leverage.

Our inflation indices

Our US Inflation Index contains a selection of TIPS ETFs that have a correlation with our 5-year US inflation-linked bond yields, a commonly used benchmark for forward looking inflation expectations. The index is provided by BITA and priced according to the weight of its constituents.

Our US Inflation Index contains five TIPS ETFs. The current index composition is: