US: CPI inflation pulse and Fed path – TD Securities

TD Securities economists expect US inflation data to firm in April, with core Consumer Price Index (CPI) boosted by shelter and airfare components and headline CPI lifted by higher Oil and food prices. They see core CPI peaking in Q2 2026 before gradual disinflation resumes, shaping expectations for the Dollar and US yields.

Core and headline CPI set to firm

"With risks of a labor market downturn subsiding, attention will continue to shift towards the Fed's inflation mandate — which will make it difficult for incoming Chair Warsh to achieve cuts."

"April CPI this week will again reflect the oil shock, with some core components showing second round effects."

"We look for core CPI to rise to 0.38% m/m (2.8% y/y), largely owing to the rebound in rent/OER prices after the government shutdown kept the segment atypically subdued in October."

"We expect headline CPI to post a firmer 0.56% m/m (3.7% y/y) gain owing to strong gasoline prices along with a rebound in food after a flat March."

"Higher energy prices along with still-high tariffs should lead to a boost in consumer prices in the near term."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)