TD Securities projects the August Consumer Price Index will show price declines in goods subject to tariffs. The bank expects a drop in core goods to keep core inflation at a 0.19% month-over-month increase.
Core Goods and Tariffs
The primary driver keeping underlying inflation in check for August is a projected drop in goods prices, it said. TD Securities analysts observed “No Meaningful Tariff Passthrough Pressures” on consumer prices.
The firm expects that the “core goods ex-vehicles segment (tariff-related) likely walked back its firm July gain with a 0.15% m/m decline,” driven largely by household goods and apparel.
Because of these offsets, the bank stated that underlying inflation “stayed under control in August.” However, analysts noted that risks to their forecast remain skewed to the upside due to their assumption of large declines in tariff-exposed categories.
Prediction Markets Diverge on Annual Rate
Traders on Polymarket are largely aligned with TD Securities on the monthly core inflation rate, but they price in a slightly higher annual figure. About 57% of the prediction market favors a 0.2% month-over-month core CPI increase. This closely tracks the 0.19% projection from TD Securities.
Conversely, a 2.4% year-over-year core CPI print is the leading Polymarket market expectation at 47%, however, TD Securities forecasts a lower 2.3% year-over-year rate for core CPI.
Headline Inflation and Services
While core goods prices fall, headline inflation is projected to regain momentum. TD Securities forecasts a 0.37% month-over-month rise in headline CPI, driven by a 4.2% jump in gasoline prices. The core services segment is expected to print a 0.26% month-over-month increase.
This services lift is fueled by firmer shelter inflation and airfares, which the bank expects to climb 3.2% from July. Despite the expected rise in headline numbers, the bank projects that core inflation will “continue to evolve positively through October.”
How Have Stock Markets Performed in 2026?
The S&P 500 index has advanced 11.88% year-to-date. Similarly, the Nasdaq Composite index was up 13.71%, and the Dow Jones gained 9.10% YTD.
On Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 and Nasdaq-100, respectively, closed lower. The SPY was down 0.55% to $765.96, while the QQQ advanced by 0.083% to $718.36. Meanwhile, the Dow tracker, State Street SPDR Dow Jones Industrial Average ETF Trust (NYSE:DIA), also ended 1.13% lower at $528.03.
In premarket trading on Tuesday, SPY was down 0.45%, QQQ fell 0.64%, and DIA fell 0.73%.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image: MAYA WASHBURN via Imagn Images
Login to comment