- Kalshi is targeting a December launch for exchange-traded futures tracking both the consumer price index and core CPI, which excludes food and energy, according to people familiar with the matter cited by Bloomberg. A Kalshi spokesperson confirmed the company is working on CPI futures but declined to give details on the rollout.
- The firm tapped Michael Ashton, a former Barclays trader known as the “Inflation Guy” and managing principal of Enduring Investments, to design the contracts and drum up interest with big investment firms. Ashton said he has consulted with hedge funds, long-only asset managers and banks active in the US inflation-linked bond and swap markets.
- The contracts would be the only futures tied directly to CPI, since CME Group has tried CPI futures in the past, including a product launched in 2004, but does not currently offer them. Pitch documents reviewed by Bloomberg show contracts for the next 12 reference months and then for May and November for the four years after that, trading 24 hours a day from Sunday to Friday with Kalshi Klear as the clearinghouse.
- The US inflation market centers on $2.2 trillion of Treasury Inflation-Protected Securities and more than $5.4 trillion of over-the-counter inflation swaps, with no futures product. Potomac River Capital’s Mark Spindel said swaps require extensive documentation that limits participation, while a futures exchange could attract new players.
What Happened?
Kalshi, best known for its prediction markets, is pitching the world’s largest banks and hedge funds on a futures market tied to US inflation. It already offers binary event contracts on whether CPI comes in above or below a certain level each month, but those have mainly attracted retail investors because they lack the smooth payouts institutions seek. Kalshi also has a growing business in perpetual contracts on crypto tokens and commodities, and has filed with the Commodity Futures Trading Commission to create perps linked to oil and US Treasuries. “There’s no exchange that trades this and they want to be the inflation exchange,” Ashton said.
Why It Matters?
The launch comes as inflation has become a central preoccupation for trading desks trying to get ahead of potential rate hikes from the Federal Reserve, which raises demand for direct hedges. Dated CPI futures also answer CME CEO Terry Duffy’s criticism that institutions cannot manage risk with perpetual contracts that have no expiration date. The product would bring Kalshi into more direct competition with CME, the dominant player in US listed interest-rate derivatives, and with the bond and rate futures offered by CME and Intercontinental Exchange. It also diversifies Kalshi away from sports event contracts, which many US states argue skirt gambling rules and taxes.
What’s Next?
The key test is whether large institutions commit to trading before the targeted December launch, with Ashton saying Kalshi is having conversations “with very large firms at very high levels across the board.” He added that the success of Kalshi’s dated-futures ecosystem will depend to some extent on how the CPI contracts perform. Watch for CFTC action on Kalshi’s proposed oil and Treasury perps and for any competitive response from CME. Spindel called a deep futures market “a valuable addition to the toolkit,” saying investors have “all been stung by surprising developments in inflation.”
Affected Tickers and Coins: CME, ICE, TIP
Source: Bloomberg
