TD Securities points to US producer prices (PPI) and consumer confidence as the main data due this week. It says January PPI will feed into forecasts for personal consumption expenditures (PCE) inflation.<\/p>\n
The firm expects February consumer confidence to rise to 85.5, after falling to 84.5 in January. It describes this as a rebound that would still be below the wider market view.<\/p>\n
For inflation, it expects January core PCE to slow to 0.19% month on month, with headline PCE at 0.12%. It says this estimate is based on January CPI and will be updated after the January PPI release on Friday.<\/p>\n
Following an upside surprise in December PCE, it now projects core PCE at 2.9% year on year and headline PCE at 2.7% year on year by end-2026. Other releases mentioned for the week include jobless claims and regional Federal Reserve surveys.<\/p>\n
The article notes it was produced using an AI tool and checked by an editor.<\/p>\n
We are bracing for inflation to remain stubbornly high, pushing back any hopes for near-term interest rate cuts. The surprise strength in the December 2025 inflation report has forced us to raise our year-end 2026 forecast for core PCE to 2.9%, well above the Federal Reserve’s target. This outlook suggests the Fed will maintain its restrictive stance for longer than the market previously anticipated.<\/p>\n
This environment points toward positioning for higher interest rates for a longer period. Derivative trades should reflect fewer Fed rate cuts being priced into instruments like SOFR futures for the remainder of 2026. Options strategies that benefit from stable or rising bond yields could prove effective, as the path to 2% inflation appears challenging.<\/p>\n
At the same time, we see signs of a strained consumer, which adds a layer of complexity. The expected rebound in consumer confidence to 85.5 is weak, sitting far below the levels above 100 that characterized the economy before the pandemic. This softness in consumer sentiment, a key driver of 70% of the US economy, signals a potential headwind for corporate earnings.<\/p>\n
The combination of sticky inflation and a weakening consumer could increase market volatility, making protective strategies attractive. Traders might consider buying put options on major indices like the S&P 500 to hedge against a potential economic slowdown. Looking at the VIX, which has been hovering near 14, suggests the market may be underpricing the risk of upcoming economic reports creating turbulence.<\/p>\n
We saw a similar situation unfold back in 2024, where initial optimism about disinflation was met with several months of persistent price pressures. Weekly jobless claims have also started to creep up from their 2025 lows, now averaging around 235,000. While not alarming, this trend supports the view that the economic landscape is becoming more challenging.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" TD Securities eyes US PPI and consumer confidence; expects modest rebound, core PCE cooling, end-2026 inflation projections.<\/p>\n","protected":false},"author":62,"featured_media":17021,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42597","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\/42597","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=42597"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/42597\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/17021"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=42597"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=42597"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=42597"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}