Kalshi plans December launch of US CPI futures contracts

Kalshi plans to launch futures contracts tied to the US Consumer Price Index in December, the company confirmed. A Kalshi spokesperson confirmed the company is working on CPI futures but did not provide details about the launch. The product is expected in December and would be the only futures contract linked directly to the CPI available in the US market, according to the report.

The contracts would cover both headline CPI and core inflation, which excludes food and energy. According to documents reviewed by Bloomberg, they would be available for the next 12 reference months and then for the May and November months over the following four years. Trading would run 24 hours a day, Sunday to Friday, with Kalshi Klear acting as clearing house.

Kalshi hired Michael Ashton, a former Barclays trader known in the market as "Inflation Guy", to structure the contracts and attract large institutional investors. Ashton, a director at Enduring Investments, said no exchange trades the product and that Kalshi wants to be the inflation exchange. He said he has consulted hedge funds, long-only asset managers and banks active in US inflation-linked bond and swap markets, and that talks are being held with large institutions at senior levels across market segments.

The US inflation market currently centres on two main instruments: $2.2 trillion in Treasury Inflation-Protected Securities (TIPS) and more than $5.4 trillion in inflation swaps traded over the counter, outside organised exchanges. Neither offers the standardised, centralised format of a futures contract, according to the report.

Kalshi chief executive Tarek Mansour, asked by Bloomberg TV about the plan, said inflation has been a central and much-debated topic in the United States and that there are no very effective tools to predict the inflation level. He said the company is entering the field of inflation pricing.

The move to futures with expiry dates also responds to criticism by CME chief executive Terry Duffy of Kalshi's perpetual contracts model. On the Odd Lots podcast, released on Monday 19 October, Duffy said contracts without expiry make institutional risk management unworkable. "You can't manage risk without an expiration date," he said, adding that institutions say it is impossible for them to trade it. CPI futures, with defined expiry dates, give Kalshi a way to counter that criticism, the report says.

The product also widens Kalshi's competition with CME in interest-rate derivatives, used by traders to hedge and speculate on changes in Federal Reserve monetary policy. CME launched CPI futures in 2004 but does not currently offer them; the company did not respond to a request for comment.

Mark Spindel, chief investment officer at Potomac River Capital, discussed the contracts with Ashton and said current use of over-the-counter swaps requires extensive documentation, which restricts participation. He said a futures market with good liquidity would be a valuable addition to the tools available to him and to other speculators and hedgers, adding that everyone has been caught off guard by unexpected inflation developments.

Kalshi also faces pressure on another front: authorities in several US states argue that its sports event-based contracts circumvent rules and taxation applicable to gambling. The CPI futures therefore represent a strategic diversification beyond that segment, according to the report.