TD Securities’ Global Strategy Team has identified the upcoming United States Consumer Price Index (CPI) release as a pivotal event for financial markets, with particular emphasis on inflation trends and their impact on the US Dollar (USD) [1]. The team forecasts a core CPI increase of 0.27% month-over-month (m/m) for March, attributing this rise to ongoing momentum in goods prices and lingering tariff pass-through effects [1]. Headline CPI is projected to jump by 0.90% m/m, primarily driven by higher oil prices, which are expected to significantly influence the energy component of the index [1].
TD Securities notes that while food inflation is likely to have cooled to 0.17% m/m, the risks to their forecasts are skewed to the upside, especially given their below-consensus projection for core CPI inflation [1]. The team also highlights that services inflation probably remained steady compared to February, supported by a rebound in shelter prices [1]. Markets may overlook any temporary weakness in the CPI print, instead betting on higher inflation in April if the March data comes in weaker; however, a stronger print could intensify inflation concerns and shape USD expectations [1].
Additionally, TD Securities references the Personal Consumption Expenditures (PCE) price data for February, which came in line with market expectations at 0.37% m/m for the core and 0.38% for the headline. They caution that this data is somewhat outdated, reflecting pre-Iran inflation conditions, but note that the strong core goods number (0.8% m/m) underscores continued tariff passthrough effects [1].
The focus for market participants will be on whether the anticipated sharp rise in energy prices is filtering into the core segment of CPI for March, as this could further exacerbate inflation concerns and influence the outlook for the US Dollar [1].
CONCLUSION
TD Securities expects a notable surge in US headline CPI, driven by rising oil prices, with core inflation also picking up momentum. Market participants are likely to closely monitor the release for signs of persistent inflation, which could impact USD expectations and broader financial sentiment. The risks to inflation forecasts remain skewed to the upside, suggesting heightened market sensitivity to the data.