US Dollar: Inflation focus shapes rate expectations – TD Securities

TD Securities economists highlight that higher US Treasury yields followed headlines on Middle East tensions and upcoming supply, with attention now turning to April United States (US) Consumer Price Index (CPI). They expect core CPI to print above consensus and headline CPI to remain firm, driven by shelter adjustments and energy and food prices, which could influence Dollar and rates pricing over the coming days.

US CPI and yields in spotlight

"On Tuesday, focus will be on CPI, where our forecast of 0.38% m/m for core is slightly above consensus of 0.36% m/m."

"We also expect a headline print of 0.56% m/m as oil continues to pass through into inflation."

"We look for core CPI inflation to accelerate to 0.38% m/m in April, largely owing to the rebound in shelter prices from methodological adjustments (consensus: 0.3%), with oil prices also likely passing through into airfares."

"Core goods should remain subdued with modest tariff passthrough."

"We also expect headline CPI to be firmer again at 0.56% m/m (consensus: 0.6%) owing to strong gasoline prices along with a rebound in food after a flat March."

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