# Kalshi Economics — Mispricing Audit (June 6, 2026)

Date: 2026-06-06
Source: https://kalshi-audits.pages.dev/2026-06-06-kalshi-economics-mispricing-audit

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# Kalshi Economics — Mispricing Audit

Report date **2026-06-06** · Category **Economics** · Horizon **45 days** · Capital **$1,000**

A deep screen of every active Kalshi **Economics** market closing before **21 Jul 2026**. The headline finding is uncomfortable but honest: **this slate is mostly efficient.** The macro-data markets here track public releases (CPI, PPI, payrolls, Treasury yields, AAA gas) that sharp traders price tightly. After diligence I deploy capital on **one core edge** and **one small asymmetric lottery**, and hold a deliberately large cash reserve rather than force money into fairly-priced contracts.

Bottom line: BUY NO on KXCPIYOY-26MAY-T4.2 (May CPI >4.2%) — the Cleveland Fed nowcast (4.18% YoY) points to a 4.2% print, but this contract only pays YES on a 4.3%+ print, and it trades at 48¢. Plus a capped-downside BUY NO lottery on the $4.16 gas leg. ~$528 deployed, ~$472 held in reserve.

## 1 · How this was researched

1. **Universe.** Queried the Kalshi DB mirror for all `status='active'` markets whose event `category='Economics'` closing within 45 days — 400+ markets, mostly micro-strike ladders (gas, CPI, Treasury, housing).
2. **Liquidity screen.** Joined the latest `market_snapshots` row per market and cut everything with `volume24h < 1500`, bid-ask spread > 5¢, or already pinned (YES bid ≥95 / ask ≤5). That left **26 candidates**.
3. **Rules first.** Pulled the full `rules` text for each. Two definitional traps surfaced immediately: (a) CPI markets resolve on the **one-decimal BLS print**, so ">4.2%" actually needs a **4.3%** print; (b) some Treasury legs say "**before** month-end" (a touch / high-water-mark) while others say "**at** month-end" (a level).
4. **Live state.** Re-pulled top-of-book and depth from the Kalshi public API at audit time (snapshots were ≤30 min stale) and confirmed fills.
5. **News diligence.** Grounded every prior in a primary source: AAA's national gas average, the Cleveland Fed inflation nowcast, the BLS April CPI/PPI releases, the Fed H.15 yield release, Bloomberg/CNBC on the SpaceX IPO, and CNBC on the Iran-war oil move. Sources are linked in §6.
6. **Reject hard.** For each survivor: are the rules unambiguous? is my evidence public? has price already moved on the thesis? can I fill without ≥3¢ slippage? Most candidates failed one of these.

## 2 · Markets reviewed

26 liquidity-screened candidates. Prices are live Kalshi top-of-book at audit time (¢). "Verdict" links to the pick or the reject rationale.

| Ticker | Market | YES bid/ask | Vol24h | Closes | Verdict |
|---|---|---|---|---|---|
| KXCPIYOY-26MAY-T4.2 | May CPI YoY >4.2% (needs 4.3% print) | 46 / 50 | 5,691 | Jun 10 | PICK 1 · BUY NO |
| KXAAAGASW-26JUN08-4.160 | AAA US gas >$4.160 on Jun 8 | 92 / 93 | 15,054 | Jun 8 | PICK 2 · BUY NO (lotto) |
| KXCPIYOY-26MAY-T4.1 | May CPI YoY >4.1% (needs 4.2% print) | 89 / 90 | 4,115 | Jun 10 | PASS — hot tape backs YES |
| KXCPI-26MAY-T0.5 | May CPI MoM >0.5% | 29 / 30 | 7,170 | Jun 10 | PASS — ~fair vs nowcast |
| KXAAAGASW-26JUN08-4.170 | AAA US gas >$4.170 on Jun 8 | 51 / 53 | 14,776 | Jun 8 | PASS — priced on the landing |
| KXAAAGASW-26JUN08-4.180 | AAA US gas >$4.180 on Jun 8 | 23 / 25 | 16,293 | Jun 8 | PASS — priced on the landing |
| KXMUSKNW-26JUN30-T790 | Musk net worth >$790B (Bloomberg) | 88 / 91 | 5,188 | Jun 30 | WATCH — SpaceX IPO ≈ fair |
| KXUSPPIYOY-26JUN11-T6.0 | May PPI YoY >6.0% | 49 / 51 | 1,925 | Jun 11 | PASS — genuine coin-flip |
| KXUSGASCPI-26JUN10-T378 | May CPI gasoline index >378 | 18 / 19 | 5,316 | Jun 10 | PASS — no clean index map |
| KXUSGASCPI-26JUN10-T377 | May CPI gasoline index >377 | 35 / 40 | 1,842 | Jun 10 | PASS — 5¢ spread |
| KXUST2-26JUN30-T4.20 | 2Y yield >4.20% **before** month-end | 78 / 79 | 2,528 | Jun 30 | PASS — touch market, fair |
| KXUSTM-26JUN30-T4.00 | 2Y yield >4.00% at month-end | 92 / 93 | 3,036 | Jun 30 | PASS — ~fair (spot 4.05) |
| KXUST10-26JUN30-T4.65 | 10Y yield >4.65% before month-end | 43 / 46 | 1,539 | Jun 30 | PASS — touch market |
| KXUST5M-26JUN30-T4.35 | 5Y yield >4.35% at month-end | 28 / 29 | 1,640 | Jun 30 | PASS — ~fair (spot 4.18) |
| KXUST30M-26JUN30-T4.95 | 30Y yield >4.95% at month-end | 69 / 70 | 2,446 | Jun 30 | PASS — ~fair (spot 4.97) |
| KXUST30M-26JUN30-T5.25 | 30Y yield >5.25% at month-end | 9 / 10 | 1,610 | Jun 30 | PASS — ~fair tail |
| KXCBDECISIONBRAZIL-26JUN17-HOLD | Brazil COPOM holds Selic Jun 17 | 57 / 58 | 3,226 | Jun 17 | PASS — real coin-flip |
| KXBRAZILINF-26JUN-T5.00 | Brazil inflation >5.00% in Jun | 13 / 14 | 1,826 | Jul 10 | PASS — ~fair tail |
| KXHOUSINGSTART-26JUN16-T1.400 | May housing starts >1.400M | 86 / 87 | 1,861 | Jun 16 | PASS — no edge |
| KXHOUSINGSTART-26JUN16-T1.450 | May housing starts >1.450M | 6 / 7 | 2,317 | Jun 16 | PASS — ~fair tail |
| KXPAYROLLS-26JUN-T40000 | June payrolls >40k | 75 / 77 | 1,730 | Jul 2 | PASS — unobserved, forecast |
| KXECONSTATU3-26JUN-T4.3 | June unemployment exactly 4.3% | 26 / 27 | 2,213 | Jul 2 | PASS — ~fair bucket |

(Also screened and cut: the same-day AAA _daily_ gas ladder closing Jun 6, already effectively resolved.)

## 3 · The picks

 PICK 1 

### Pick 1 — KXCPIYOY-26MAY-T4.2 · BUY NO @ 0.55 · Medium Conviction

**Market:** Will May 2026 CPI inflation be above 4.2% YoY?
**NO entry:** 54–55¢
**Resolves:** Jun 10, 2026 (BLS 8:30am ET)

**The mispricing.** The contract title says "above 4.2%," but the rule resolves on the **one-decimal value reported by BLS** — so YES requires a printed **4.3% or higher**. The Cleveland Fed's inflation nowcast — the single best real-time predictor, because it already ingests the daily oil and weekly retail-gas data that drive this print — sits at **4.18% YoY**, which rounds to a **4.2%** headline. A 4.2% print resolves this market **NO**. The market nonetheless prices YES at 48¢, implying a ~48% chance of a 4.3%+ print, i.e. a center near 4.23–4.25%. That is hotter than the nowcast by 0.05–0.07pp.

**Why NO is the value side.** Centering reported May YoY on the 4.18% nowcast (modal print 4.2%), a 4.3% print needs the actual to land ≥4.25% — roughly a 0.07pp upside miss versus the best model. Even widening the error band and crediting the current hot-surprise regime, P(4.3%+) lands ~25–35%, not 48%. NO bought at 54¢ is therefore worth ~65–75¢.

- **Cleveland Fed nowcast 4.18% YoY for May** — corroborated across two trackers (nowcast page + Octagon market tracker), and consistent with the Cleveland Q2 annualized CPI nowcast of ~6.4% (≈0.52%/mo). [clevelandfed.org](https://www.clevelandfed.org/indicators-and-data/inflation-nowcasting)
- **April CPI printed 3.8% YoY (+0.6% MoM)**, up from 3.3%, energy +17.9% YoY — the oil-shock base for May. [BLS CPI](https://www.bls.gov/news.release/cpi.nr0.htm), [CNN](https://www.cnn.com/2026/05/12/economy/us-cpi-inflation-april)
- **Energy is now rolling over.** WTI ≈ $91 on Jun 5 (−20% from the 2026 high) on Iran/Lebanon ceasefire progress, and AAA gas has fallen two straight weeks — capping further May/June energy upside. [CNBC](https://www.cnbc.com/2026/05/29/oil-prices-iran-ceasefire-us-trump-strait-hormuz-energy-costs.html)

**Tail risk (the clean one):** a hot energy surprise. April CPI beat consensus and **April PPI beat hard (6.0% vs 4.8% expected)** — in this oil-shock regime, inflation prints have been surprising _up_. A single 4.3% headline (actual ≥4.25%) loses the whole position. That upside skew — plus my inability to load the live nowcast page directly (cited value is from mirrors) — is exactly why this is sized as a medium-conviction core, not a max bet.

True P(YES, 4.3%+) ≈ **28%**
NO fair ≈ **72¢**
NO price **54¢**
Edge ≈ **+18¢**
EV ≈ **+33%**/contract

**Liquidity / fills:** NO buyable at 54¢ (≈290 contracts), 55¢ (≈1,000), 57¢ (≈500) — a few-hundred-dollar clip fills inside 1¢ of the 55¢ limit. **Price history:** last 48¢, traded a tight 46–54¢ band over the past 24h on ~5.7k contracts; OI ~34.9k. No 48h thesis-moving jump.

 PICK 2 

### Pick 2 — KXAAAGASW-26JUN08-4.160 · BUY NO @ 0.10 · Low Conviction · Asymmetric Lottery

**Market:** Will AAA US gas be above $4.160 on Jun 8?
**NO entry:** 8–10¢
**Resolves:** Jun 8, 2026

**The setup.** AAA's national average is **$4.220** (Jun 5 report) and falling steadily: $4.241 (Jun 4), $4.391 a week ago, $4.483 a month ago — a remarkably linear ~2.0–2.4¢/day decline, driven by WTI down ~20% on ceasefire optimism. A simple extrapolation of the print that resolves "on Jun 8" (which reflects ~Jun 7 collection) lands at roughly **$4.15–$4.17** — straddling the $4.160 strike. Yet the market prices YES (gas stays >$4.16) at **92%**, leaving NO at just **8¢**.

**Why a small NO.** This is not a claim that the market is dumb — these AAA ladders are traded by sharp, gas-watching desks. It is a pure **asymmetry** play: downside is capped at ~10¢, while my landing model puts a realistic **~25–35%** chance the Jun 8 figure prints ≤$4.16 as the decline grinds into the strike. At a ~10¢ entry that is materially +EV even if I'm fading smart money, because an 8% NO probability is hard to defend when the underlying is sitting just 6¢ above the line and dropping 2¢/day.

- **AAA national average $4.220, Jun 5**, "second straight week of decline." [gasprices.aaa.com](https://gasprices.aaa.com/)
- **WTI ≈ $91, −20% from 2026 peak**, Iran/Lebanon ceasefire progress pulling pump prices down. [CNBC](https://www.cnbc.com/2026/05/29/oil-prices-iran-ceasefire-us-trump-strait-hormuz-energy-costs.html)

**Tail risk (the clean one):** **resolution timing.** If "on Jun 8" is read off an earlier daily print (≈$4.18–4.20) rather than the freshest one, $4.16 is cleared comfortably and NO loses — and that ambiguity is the most likely reason the market sits at 92%. A renewed oil spike (ceasefire collapse) would also halt the decline. Hence: small size, capped loss, lottery label.

True P(NO, ≤$4.16) ≈ **30%**
NO fair ≈ **30¢**
NO price ≈ **9–10¢**
Edge ≈ **+20¢**
EV ≈ **+200%** (high variance)

**Liquidity / fills:** NO thin at the top — ~21 @8¢, ~130 @9¢, ~504 @10¢; a ~$60 clip fills near a 10¢ average. **Price history:** YES firmed from ~88¢ to 92–93¢ over the evening on heavy volume (15k/24h) — the market is leaning _into_ "gas holds above $4.16," which is the signal I am deliberately fading in small size.

## 4 · Recommended $1,000 portfolio

One steady core, one capped lottery, and a large deliberate cash reserve. I am not going to manufacture diversification by deploying into the dozen fairly-priced contracts above — that would be paying the spread for negative edge.

| Pick | Side | Limit | Contracts | Cost | Max payout | EV ¢/ct | EV $ | Conv. |
|---|---|---|---|---|---|---|---|---|
| KXCPIYOY-26MAY-T4.2 | BUY NO | 0.55 | 850 | $467 | $850 | +17 | +$145 | Med |
| KXAAAGASW-26JUN08-4.160 | BUY NO | 0.10 | 600 | $60 | $600 | +20 | +$120 | Low |
| Total deployed |  |  |  | $527 | $1,450 |  | +$265 |  |
| Cash reserve |  |  |  | $473 | — |  |  |  |

Blended EV on deployed capital ≈ **+50%**, but that figure is flattered by the high-variance gas lottery; the steadier read is the **CPI core at ~+31% EV**. Dollar edge ≈ **+$265 expected** on $527 at risk — with a wide outcome distribution.

### Risk profile

- **Worst case:** both legs resolve against me — a hot 4.3%+ CPI print and gas holding >$4.16 — for a **−$527** loss (−52.7% of capital; reserve untouched).
- **Best case:** both win → **$1,450** payout, **+$923** profit.
- **Most-likely single outcome:** CPI NO wins (~72%), gas lottery loses (~70%) → $850 payout, **+$323** net.
- **Concentration — read this.** Both picks are the _same_ bet wearing two hats: **energy/inflation prints in at-or-below expectations, not above.** A renewed oil spike (Iran ceasefire collapse, Hormuz back in play) would simultaneously keep gas elevated _and_ push CPI hot — losing both. This portfolio has **one underlying thesis**, not two. The oversized cash reserve is the hedge.

### Execution notes

- **CPI core:** work a NO limit at **0.55** (don't chase past 0.57). It's a single binary on a scheduled 8:30am ET release — the position is fully formed before Jun 10; there is no managing it intraday. Size is ~45% of capital deliberately: a real-but-modest edge against a sharp, liquid market deserves a modest stake, not a hero bet.
- **Gas lottery:** passive NO limit at **0.10**; do not pay up. If it doesn't fill, skip it — the edge is entirely in the cheap entry.
- **Dry powder ($473):** held intentionally. The Jun 10 CPI and Jun 11 PPI releases routinely dislocate the Treasury and gas-CPI ladders for minutes-to-hours afterward — that is the moment to redeploy, not now.
- **What invalidates each thesis:** CPI — the live Cleveland nowcast climbing toward ≥4.25% in the days before release (watch it daily), or a fresh oil spike. Gas — confirmation that "Jun 8" resolves off an earlier daily print, or AAA's decline flattening above $4.17.

## 5 · What I rejected, and why

The rejects are the point — they show the screen worked. Five instructive misses:

### Treasury "mispricings" that were definitional traps

At a glance, KXUST2-26JUN30-T4.20 ("2Y >4.20%") at **78%** looks absurd: the 2Y closed at **4.05%** on the Jun 4 H.15. But the rule says "**before** month-end," making it a **touch / high-water-mark** market — it pays YES if the 2Y is _ever_ above 4.20% during June. From 4.05% with normal volatility, a +15bp touch over 24 days is genuinely ~70–80% likely. The "at/for month-end" legs (KXUSTM 2Y>4.00 @92, KXUST5M 5Y>4.35 @28, KXUST30M 30Y>4.95 @69) are all _consistent_ with the live curve (2Y 4.05 / 5Y 4.18 / 10Y 4.47 / 30Y 4.97). No edge — just two different contract mechanics that look contradictory until you read them. [Fed H.15](https://www.federalreserve.gov/releases/h15/)

### The rest of the gas ladder — priced right on the landing

With AAA at $4.220 and falling ~2¢/day, the Jun 8 print lands near **$4.17**. The ladder reflects exactly that: >$4.17 at a coin-flip (51¢) and >$4.18 at 23¢. Those are fair-to-the-landing, and the resolution is knife-edge sensitive to which day's figure is used — a reason to _avoid_, not bet. Only the far-from-landing $4.16 leg offered the capped-downside asymmetry worth a small stake.

### Musk >$790B — a real catalyst, fairly priced

KXMUSKNW-26JUN30-T790 trades 88/91. The catalyst is concrete: SpaceX is set to debut on Nasdaq **~Jun 12 at $135/share** (~$1.77T), which by Bloomberg's own math marks Musk to **~$988B** — ~$200B above the strike. Build it up: P(IPO debuts by Jun 30) ~90% × P(stays >$790B | listed) ~97% ≈ **~88%**. That is the market. Buying YES at the 91¢ ask is negative edge; an 88¢ limit is roughly zero. **Watchlist**, not a deploy. [CNBC](https://www.cnbc.com/2026/06/03/elon-musks-net-worth-poised-to-sail-past-1-trillion-in-spacex-ipo.html), [Bloomberg](https://www.bloomberg.com/news/articles/2026-06-03/spacex-ipo-price-would-put-musk-just-shy-of-trillionaire-status)

### May CPI >4.1% — fighting a hot tape

The sister leg KXCPIYOY-26MAY-T4.1 (YES needs a 4.2% print) trades 89%. With the nowcast at 4.18% → modal 4.2%, that's broadly right, and the upside-surprise regime (April CPI and PPI both beat) backs it further. Betting NO here at 11¢ means betting on a _soft_ 4.1% print in a month where energy ran hot — fighting the tape. Pass.

### Brazil COPOM, PPI, payrolls, housing, unemployment — honest coin-flips

KXCBDECISIONBRAZIL-26JUN17-HOLD (57%) is a genuine hold-vs-cut toss-up after the BCB began easing — and the public rate path I could assemble was too muddled to claim an edge. KXUSPPIYOY-26JUN11-T6.0 (49/51) is a true coin-flip on whether May PPI holds April's 6.0%. June payrolls, housing starts, and the "exactly 4.3%" unemployment bucket are unobserved forecasts with no public edge. Forcing a view on any of these would be storytelling, not trading.

## 6 · Sources

- AAA national gas average (live): [gasprices.aaa.com](https://gasprices.aaa.com/)
- Cleveland Fed inflation nowcast: [clevelandfed.org/indicators-and-data/inflation-nowcasting](https://www.clevelandfed.org/indicators-and-data/inflation-nowcasting); market tracker corroboration: [Octagon AI](https://octagonai.co/markets/economics/inflation/inflation-in-may-2026-cpi-yoy/)
- BLS CPI, April 2026: [bls.gov/news.release/cpi.nr0.htm](https://www.bls.gov/news.release/cpi.nr0.htm); coverage: [CNN](https://www.cnn.com/2026/05/12/economy/us-cpi-inflation-april)
- BLS PPI, April 2026: [bls.gov/news.release/ppi.nr0.htm](https://www.bls.gov/news.release/ppi.nr0.htm)
- Federal Reserve H.15 selected interest rates (Jun 5, 2026): [federalreserve.gov/releases/h15](https://www.federalreserve.gov/releases/h15/)
- WTI / Iran-war oil move: [CNBC, May 29 2026](https://www.cnbc.com/2026/05/29/oil-prices-iran-ceasefire-us-trump-strait-hormuz-energy-costs.html)
- SpaceX IPO & Musk net worth: [CNBC, Jun 3 2026](https://www.cnbc.com/2026/06/03/elon-musks-net-worth-poised-to-sail-past-1-trillion-in-spacex-ipo.html); [Bloomberg, Jun 3 2026](https://www.bloomberg.com/news/articles/2026-06-03/spacex-ipo-price-would-put-musk-just-shy-of-trillionaire-status)
- Brazil COPOM / Selic: [Trading Economics](https://tradingeconomics.com/brazil/interest-rate)
- Live market data & orderbooks: Kalshi public API [api.elections.kalshi.com/trade-api/v2](https://api.elections.kalshi.com/trade-api/v2); market mirror DB (rules, snapshots).

**Data sources:** Kalshi DB mirror (markets, rules, 5-min snapshots) + Kalshi public API (live orderbooks) + primary-source web research, all as of 2026-06-06. Yields/prices quoted from the Jun 4–5 official releases noted above.

**Disclaimer:** Not financial advice. All probabilities here are _subjective_ estimates, not guarantees. Prediction-market contracts resolve to $0 or $1 — a "+EV" position can and will lose its entire stake when the event breaks the other way. The two picks share a single energy/inflation thesis and can lose together. Position sizes assume you can fill at or near the stated limits; thin books move. Do your own diligence.