TD Securities Forecasts Re-acceleration in US PCE Inflation for December

TD Securities expects a firming of US PCE inflation in December, the Federal Reserve's preferred price gauge. The firm forecasts Core PCE to rise by 0.25% on a month-over-month basis, reflecting persistent price pressures. On an annual basis, Core PCE is projected to reach 2.9%, while Headline PCE is expected at 2.8%. These projections suggest that inflationary trends could re-accelerate into 2026, indicating that price stability may take longer to achieve than previously anticipated. Such a scenario would likely support a hawkish stance from the Federal Reserve, bolstering the US Dollar and Treasury yields like the US10Y. Consequently, non-yielding assets such as Gold (XAU/USD) may face downward pressure as the opportunity cost of holding them increases.