Trading on inflation
Inflation is one of the most heavily discussed economic metrics in financial markets. Discover how to trade inflation using our US inflation index.
Call 0800 195 3100 or email newaccounts.uk@ig.com to talk about opening an account.
What is inflation and why should you trade it?
Inflation – the increase in the price of products and services in an economy – is measured using a consumer price index (CPI). Central banks, such as the Federal Reserve (Fed), are typically responsible for maintaining low inflation levels. For when inflation rises, so do a string of problems like a currency’s value or consumers’ purchasing power.
The Fed expanded its balance sheet dramatically, with assets increasing from $4.2 trillion at the end of 2019 to $8.8 trillion at the end of 2021. This is called ‘quantitative easing’. And, in this particular case, almost half of this expansion occurred during the COVID-19 period, when the Fed purchased $80 billion worth of Treasury securities and $40 billion in mortgage-backed securities on a monthly basis.
The influx of excess money into the economy has a significant impact on the prices of products and services. And that’s inflation.
Many people want to trade inflation because it can be used as a hedging tool 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. The ability to get direct exposure to the inflation rate by speculating on assets is another reason why some people might want to trade on inflation.
How to trade inflation
You can now get exposure to inflation all in one place with our unique inflation index, which you won’t find anywhere else. With us, you’ll take a position on the index using spread bets and CFDs. Both are derivative products, which means you can:
Go long or short
Trade on leverage
Get tax benefits1
When trading, you’ll never take ownership of an asset, and will instead take a position on the price of the index rising or falling in value. Note that all trading carries risk. This is only amplified when trading on leverage. Learn more about how to manage your risk.
To trade inflation with us, follow these steps:
1. Learn about trading on inflation
2. Open a spread betting or CFD trading account (or both)
3. Select you deal size and take steps to manage your risk
4. Open your position
Our inflation index
Our inflation index contains a selection of gilt and TIPS ETFs that has a correlation with our US inflation-linked bond yields, a commonly used benchmark for forward looking inflation expectations.
We offer a US Inflation Index. It is provided by BITA and priced according to the weight of their constituents.
Our US Inflation Index contains five TIPS ETFs. The current index composition is:
| TIP | 20%* |
| SCHP | 20%* |
| VTIP | 20%* |
| STIP | 20%* |
| SPIP | 20%* |
* Figures are approximate
Why trade inflation with us?
Trade the movements of the only inflation index in the world
Get direct exposure to US inflation rates through our unique index
Trade key ETFs that benchmark inflation with a single position
Get the best execution on your trades with our industry-leading tech
Open a trading position with spreads from just 2 points
Enjoy an award-winning platform with the world’s No.1 trading provider1, 2
Key inflation markets
Costs and charges
- Spread betting costs
- CFD trading costs
Spread betting is a form of leveraged trading, meaning you can win, or lose, a significant amount more than you deposit initially.
Your key payment for trading inflation using this method is the spread – the difference between the buy and sell price of an asset. Essentially, this is our commission for executing your trade. We work to keep our spreads among the lowest in the business.
Margin |
Minimum margin requirement of 20% for retail clients trading the US Inflation Index |
Spread |
From 2 points on the inflation index |
Overnight funding |
Overnight funding applies to positions held overnight on cash (spot) positions only. Forwards do not incur overnight funding charges. Learn more about overnight fees |
CFD trading is also a form of leveraged trading, so you can gain or lose a significant amount more than you deposit. With share CFDs, you will be charged a commission. With all others markets, you’ll be charged a spread.
Margin |
Minimum margin requirement of 20% for retail clients trading the US Inflation Index |
Spread |
From 2 points on the inflation index. We don’t attach our own spread to share CFDs |
Commission |
No commission on the US Inflation Index |
Overnight funding |
Overnight funding applies to positions held overnight on cash (spot) positions only. Forwards do not incur overnight funding charges. Learn more about overnight fees |
Open an account now
*Demo accounts are only available for spread betting and CFD trading.
Open an account now
Fast execution on a huge range of markets
Enjoy flexible access to 15,000+ global markets, with reliable execution
Deal seamlessly, wherever you are
Trade on the move with our natively designed, award-winning trading app
Feel secure with a trusted provider
With 50 years of experience, we’re proud to offer a truly market-leading service
*Demo accounts are only available for spread betting and CFD trading.
Open an account now
Open an account now
Fast execution on a huge range of markets
Enjoy flexible access to 15,000+ global markets, with reliable execution
Deal seamlessly, wherever you are
Trade on the move with our natively designed, award-winning trading app
Feel secure with a trusted provider
With 50 years of experience, we’re proud to offer a truly market-leading service
Trade inflation on a live account
You can open an account with us in three steps.
Fill in our online form
Answer a few questions about your trading experience
Wait for approval
We’ll verify your identity before processing your application
Fund your account
Start trading or continue practising on a risk-free demo account
FAQ
How can I trade on inflation?
You can trade on inflation with us thanks to our unique inflation index – a first, which you won’t find anywhere else. You can trade US inflation with a single position. Our inflation index track benchmark gilt and TIPS ETFs listed on major exchanges.
To get started, open a spread betting or CFD trading account. You can use both to trade our inflation index on leverage, which means you only need to put down a deposit to open your position. You’ll still get exposure to the full value of the trade – and profits and losses will be based on this amount, not your deposit.
It’s very important to note that trading is a high-risk activity. Your losses can significantly outweigh your deposit, as well as any profits that you make along the way. So, while trading gilt and TIPS ETFs give you possible inflation protection, the risk of losing money is still high. Always take care to manage your risk using our in-platform tools.
Try these next
Trade or invest in themes such as electric vehicles, AI and robotics
Learn more about indices and how to trade them with us
Discover ways to take a short-term position on interest rates
1 Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.
2 Best trading platform as awarded at the ADVFN International Financial Awards and Professional Trader Awards 2021. Best trading app as awarded at the ADVFN International Financial Awards 2021.
3 Based on revenue excluding FX (published financial results, October 2020).
Connect with us
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Professional clients trading spread bets and CFDs can lose more than they deposit.
Options and futures are complex instruments which come with a high risk of losing money rapidly due to leverage. They’re not suitable for most investors. Before you invest, you should consider whether you understand how options and futures work, the risks of trading these instruments and whether you can afford to lose more than your original investment.
Trading stocks and shares ‘on margin’ within a US options and futures account – meaning that you only finance part of the cost of acquiring a position in a security – carries additional risks over buying securities on a fully funded basis and may result in losses exceeding your original investment. Trading on margin will also result in additional costs to you as the investor and any securities purchased using margin may be held as collateral by the lender, restricting both your rights as shareholder, and your ability to use the securities until the margin trade is closed. You should familiarise yourself with these risks before trading on margin.
The value of shares, ETFs and other ETPs bought through a share dealing account, a US options and futures account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results. Some ETPs carry additional risks depending on how they’re structured, investors should ensure they familiarise themselves with the differences before investing.
Share dealing and IG Smart Portfolio accounts provided by IG Trading and Investments Ltd, CFD accounts and US options and futures accounts are provided by IG Markets Ltd, spread betting provided by IG Index Ltd.
IG is a trading name of IG Trading and Investments Ltd (a company registered in England and Wales under number 11628764), IG Markets Ltd (a company registered in England and Wales under number 04008957) and IG Index Ltd (a company registered in England and Wales under number 01190902). Registered address at Cannon Bridge House, 25 Dowgate Hill, London EC4R 2YA. IG Markets Ltd (Register number 195355), IG Trading and Investments Ltd (Register Number 944492) and IG Index Ltd (Register number 114059) are authorised and regulated by the Financial Conduct Authority.
The information on this site isn’t directed at residents of the United States, Belgium or any particular country outside the UK and isn’t intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.