Kalshi courts Wall Street in bid to be the ‘inflation exchange’

Kalshi Inc., the New York-based firm best known for its prediction markets, is targeting a December launch for exchange-traded futures contracts tracking both the consumer price index and the core inflation gauge, which excludes food and energy, according to people familiar with the matter. The firm has enlisted Michael Ashton, a former Barclays Plc trader known as the "Inflation Guy," to design the contracts and drum up interest among large investment firms. Ashton, managing principal of Enduring Investments LLC, said, "There's no exchange that trades this and they want to be the inflation exchange." A Kalshi spokesperson confirmed work on CPI futures but declined to provide details on the rollout.

According to documents reviewed by Bloomberg, the contracts would be available for the next 12 reference months and then for May and November over the following four years. They would trade 24 hours a day from Sunday to Friday, with Kalshi Klear LLC acting as clearinghouse. The contracts would be the only futures directly tied to CPI, giving Kalshi a way to compete with CME Group and Intercontinental Exchange in interest-rate and bond futures markets. CME previously attempted CPI futures but does not currently offer them; CME launched an inflation futures product in 2004, which Ashton said did not meet the needs of TIPS market participants.

Kalshi's existing CPI event contracts, which pay out on whether CPI prints above or below a given level, have mainly attracted retail investors because their binary payouts lack the smooth outcomes institutions typically seek. The firm also offers perpetual contracts tied to crypto tokens and commodities, and has filed with the CFTC for perps linked to oil and U.S. Treasuries. Because perps have no expiration date, they are difficult to integrate into existing Wall Street infrastructure, which is why the dated CPI futures are seen as a test of Kalshi's traditional futures ambitions. CME CEO Terry Duffy has been critical, saying on an Odd Lots podcast that "People can't manage risk with no expiration date."

The U.S. inflation market is dominated by $2.2 trillion in TIPS and over $5.4 trillion in inflation swaps traded over the counter. Mark Spindel, chief investment officer at Potomac River Capital LLC, said current OTC swap trading requires extensive documentation that limits participation, and that a futures exchange could attract new players. He described a deep futures market as "a valuable addition to the toolkit at my disposal, as well as other speculators and hedgers." CME and ICE did not respond to requests for comment.