Inflation trading is hot. It is so hot, that last week Deutsche Bank announced the appointment of global co-heads of inflation trading and a head of inflation options and exotics trading, two of whom were hired externally from SocGen and Citigroup – even though we are months from the end of the year.

Other banks have been building their inflation desks too. Commerzbank has hired a head of inflation trading in London from UBS, alongside various rates hires. Bank of America hired David Slater from BNP Paribas back in May and BNP is understood to have hired a replacement for Slater recently. Steve Ashley, who moved to Nomura in May, is also an inflation specialist.

Ben Bernanke’s latest bout of quantitative easing and ominous predictions of hyperinflation everywhere from the US to the UK and Japan, mean inflation traders aren’t going to go away. They are going to become more popular.

“Inflation trading is one of the very, very profitable parts of the world this year,” says Lee Thacker, a fixed income search consultant. “Investors increasingly want to hedge their portfolios against inflation risk.”

“Last year was strong for inflation trading people and this year a number of senior traders have moved,” says Russell Clarke at fixed income headhunters FigTree Search.

“It’s a niche area within rates trading and can sit on both flow and exotics desks,” he adds. “There are two main elements to the inflation trading desk – specialisation in Euro or sterling; government linked bonds and interest rate derivatives- swaptions etc.”

Clarke says people move into inflation trading from several routes: sterling or Euro bond relative value trading, vanilla fixed income derivatives, or inflation analysis and strategy.

“Essentially it’s an interest-rate based skillset with specific knowledge of the inflation linked market. There’s a definite lack of good quantitative sterling inflation traders but a strong supply of inflation bond traders in general,” he concludes.