I'm not looking to deploy more capital speculatively to offset the potential increase in my costs. I am looking to protect the profit I will make from this customer if I can't control the wages. TIPS vs Treasuries seem like the best bet. I would think the bank would give me a reprieve on my covenants since it would be hedging a direct business risk.
So looking at maturities around 2022, breakevens are currently pricing ~1.7% which seems relatively cheap by historical standards. 10yr CPI averages haven't historically done less than ~2.3% and breakevens could trade closer to 3% depending on expectations in the interim.
Well, historical standards might not be such a good guide here, given that headline CPI is pretty much guaranteed to print negative for the next few months. Brave new world, innit?