We are positioned for this trade with shorts on the XLU and put option on it as well as puts on the Vanguard Utility ETF, VPU. Both of which have made nice runs this year and could pull back some on hotter than expected numbers. It’s a somewhat asymmetrical trade as their doesn’t seem to be huge risk on the downside and some nice alpha on the upside.
May 11, 2014 4:50 p.m. ETThe next small steps up in inflation could set off big tremors in financial markets.The two main U.S. inflation gauges, the Labor Departments consumer-price index and the Commerce Departments personal consumption expenditures price index, are hovering near the lowest levels ever seen outside of recessions.Both sit poised to drift upward. Wholesale and import prices show signs of picking up, suggesting some inflation in the pipeline, and some items that briefly declined in price over the past year—such as prescription drugs, financial fees and garments—have started climbing again.
via Markets Watch, Warily, for a Small Bump in Inflation – WSJ.com.