PowerShares DB US Inflation ETN (INFL) and PowerShares DB US Deflation ETN (DEFL) began trading December 6, 2011. They claim to be the first exchange-traded products offering direct exposure to US inflation/deflation expectations, i.e. the spread between Treasury Inflation-Protected Securities (TIPS) and US Treasury bonds.

The underlying DBIQ Duration-Adjusted Inflation Index and DBIQ Duration-Adjusted Deflation Index have very limited history, dating back only to 7/25/2011. ETN performance is based on gain or loss of $0.10 (on a $50 starting value) for each 1 point increase or decrease in the applicable index, plus 3-month T-Bills, less an investor fee of 0.75%. The indexes measure the TIPS spread at three different maturities with 5-year securities nominally weighted at 50%, 10-year at 40%, and 30-year at 10%.

Other inflation-oriented ETPs do not attempt to capture the performance difference between TIPs and Treasury bonds. For example, ProShares UltraShort TIPS (TPS) is designed for investors wanting to hedge against a decline in TIPS or potentially benefit from a downturn in TIPS. However, due to the non-symmetrical design of TIPS, a short position is not an out-and-out bet on deflation.

Additional information on INFL and DEFL can be found in the overview, fact sheet (pdf), and prospectus (pdf). Since they are structured as ETNs (exchange traded notes) they are subject to the credit risk of Deutsche Bank, the issuer.