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TD Securities flags rising odds for an October Fed hike
The team expects two additional Fed hikes, driven by inflation data and labor-market resilience after a softer September jobs report.
TD Securities economists Oscar Munoz and Eli Nir say an October Federal Reserve rate hike is looking increasingly likely, pointing to continued hawkish comments from Fed officials and new macro data. They add that Fedspeak suggests officials are still “expecting more hikes,” citing reduced confidence that inflation is moving fast enough toward target.
In their view, strong PCE inflation, modest gains in ISM Manufacturing, and a softer September NFP with higher unemployment have shifted the policy outlook. They also link their inflation expectations to recent CPI and PPI strength, with PCE headline at 0.38% month over month, or 3.8% year over year, and core at 0.32% month over month, or 3.4% year over year.
TD Securities expects two further Fed hikes, in October and January, with decisions depending on incoming inflation prints and whether labor-market strength persists. The team also notes market attention will be on BEA annual revisions and expects spending to accelerate to 0.9% (0.5% real).