Deutsche Bank have announced the launch of the DB Core US CPI Index (Bloomberg ticker: DBLNCPI, Reuters RIC: DBLNCPI), the first tradable index that tracks core inflation.
The DB Core US CPI Index, tradable on an over-the-counter basis, is designed to track the Core Consumer Price Index (CPI). The Core CPI, a widely used measure of inflation, excludes the most volatile components of overall CPI, thus demonstrating a more accurate measure of the overall trend in consumer prices. The DB Core CPI Index is transparent, rules-based and enables clients to obtain protection from inflation while reducing volatility risk.
Deutsche Bank is actively quoting over-the-counter swaps that pay the return on the DB Core US CPI index versus fixed rates. As of August 31, two-year inflation swap prices on the DB Core US Inflation Index are implying 1.5% annualized inflation over the next two years.
“The DB Core US CPI Index reflects Deutsche Bank’s continued innovation and commitment to expand the tools available to our clients,” said Aram Flores, Head of Index Research for the Americas. “We expect this index to be a significant barometer for the industry and a more accurate measure than other tradable inflation strategies.”
“We are seeing interest from clients for a variety of reasons that include obtaining exposure to a more stable measure of inflation, greater diversification from other assets classes, and using the DB Core US CPI Index as a better proxy hedge for more specific inflation exposures than they may have,” said Allan Levin, Head of Inflation Trading for North America.
The DB Core US CPI Index represents the latest addition to the DBIQ Index family of benchmark indices. The DBIQ Index family includes indices covering the global fixed income, FX, equities and commodities asset classes.