New inflation figures are expected to be tame, though investors are betting it's about to pick up

Key Points
  • Some investors have been using TIPs and other trading strategies to hedge themselves against rising inflation, but the debate is raging on about whether inflation will start to rise in the next year, as expected by some.
  • Analysts said Wednesday's CPI report could be an important update on consumer price inflation, which some expect could start to rise next year.
  • Core inflation is expected to have risen by 0.2% in July , or 1.2% annualized.
Shoppers search for items at a Costco Wholesale store August 4, 2020 in Colchester, Vermont.
Robert Nickelsberg | Getty Images

Some investors are betting that the Covid-19 economic recovery will bring something the return from the financial crisis never did - inflation.

In the past month, the dollar has lost 3% and gold has gained nearly 7% on the idea that inflation will grow along with the ballooning U.S. budget deficit. That trade was unwinding on Tuesday, as investors took profits out of what has become very crowded positions, and gold fell 6%.

The next reading of Inflation is Wednesday at 8:30 a.m. when July's consumer price index is reported. Inflation readings have been very tame, and the July number is expected to be much of the same.