TD Securities has revised its GDP growth projections for the US economy, citing stronger personal spending and expected tax refunds in early 2026. Economic activity is expected to remain robust, with a gradual easing of monetary policy anticipated.<\/p>\n
The unemployment rate is projected to stabilise at 4.3% by the fourth quarter of 2026. The report suggests that tax refunds could lift economic growth and consumption at the start of the year, leading to an output increase of 2.3% for the year 2026.<\/p>\n
We have revised our US GDP growth projections upward due to the strong personal spending we saw close out 2025, along with an expected boost from tax refunds early this year. This economic strength, with growth now forecast at an above-consensus 2.3% for 2026, adds significant risk that the Federal Reserve will remain on hold for longer. The unemployment rate is also expected to remain firm, stabilizing around 4.3% by the end of the year.<\/p>\n
This outlook is reinforced by the latest data, which showed the final reading for Q4 2025 GDP came in at a robust 2.9% annualized rate. Additionally, the December 2025 inflation report showed the Consumer Price Index stalling at 3.4%, giving officials little reason to rush into rate cuts. Last week, we also heard from Fed Governor Waller, who warned against easing policy too soon, further cementing this cautious view.<\/p>\n
For interest rate derivatives, this suggests pricing out any significant probability of a rate cut at the March FOMC meeting. The yield on the 2-year Treasury note has already climbed back toward 4.50% in response to this resilient economic picture. This environment favors strategies that bet on rates staying elevated, such as selling SOFR futures contracts or buying put options on Treasury bond ETFs.<\/p>\n
In the equity markets, this creates a two-sided scenario that could boost volatility. Stronger growth is a positive for corporate earnings, but the prospect of delayed rate cuts could cap stock market multiples, a dynamic we saw repeatedly throughout 2023. Therefore, traders might consider buying VIX call options or using options straddles on the S&P 500 to position for larger price swings in either direction.<\/p>\n
This backdrop of a strong US economy and a patient Fed should continue to support the US dollar. The Dollar Index (DXY) has already climbed above 104 in January, its highest level since we saw in November of last year. Positioning for continued dollar strength against currencies with more dovish central banks, like the euro, appears to be a sound strategy for the coming weeks.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" TD Securities raises 2026 GDP forecast, citing strong spending, tax refunds, and stable unemployment outlook.<\/p>\n","protected":false},"author":62,"featured_media":16966,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-40143","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/40143","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=40143"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/40143\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16966"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=40143"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=40143"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=40143"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}