Because this call predates the meeting, its real market relevance now lies in whether it survives contact with what the Fed actually signalled. TD’s January leg sits ahead of the Fed’s own median dot, which points to only one further hike this year rather than two, so the call is currently more hawkish than the central bank’s own guidance rather than confirming it.
If TD reaffirms the sequencing in the coming days, that would put it in a small group with Goldman Sachs pushing timelines earlier than the December consensus most other major banks still hold, reinforcing the case for near term dollar strength and pressure on rate sensitive assets. If TD instead walks back the January leg once the dot plot’s actual message is fully digested, that would suggest the initial post CPI shift was more about the inflation print than a considered read of the Fed’s own reaction function.
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TD called three Fed hikes before the Fed had even delivered its first one, and now that call has to hold up against the central bank’s own dot plot.
Summary:
- TD Securities forecast ahead of the Fed’s meeting yesterday a total of three hikes in this cycle: September, October and January 2027
- The call reversed TD’s prior expectation that the Fed would hold rates steady through the rest of 2026
- The shift followed a hotter than expected August CPI report released the same week
- Strategists Oscar Munoz and Gennadiy Goldberg said they expected no explicit forward guidance from the Fed but a hawkish dot plot
- The September hike has since been delivered as expected, taking the fed funds range to 3.75% to 4.00%
- The Fed’s own dot plot pointed to only one additional 2026 hike, putting TD’s January leg ahead of the central bank’s median guidance; whether TD has updated the call since Wednesday’s meeting is not yet clear
TD Securities forecast on September 11, five days ahead of the Federal Reserve’s meeting, that the central bank would deliver a total of three interest rate hikes in this cycle, reversing its previous call that the Fed would remain on hold for the rest of 2026. Strategists Oscar Munoz and Gennadiy Goldberg wrote that they expected the first hike to land at the September meeting, with the next two increases following in October and January 2027.
The revision came in direct response to the August consumer price index report released the same week, which came in hotter than expected and raised fresh doubts that inflation was making sufficient progress toward the Fed’s target. TD’s strategists said the data showed inflation had not cooled fast enough, and while they expected the Fed to withhold explicit forward guidance at the September meeting, they anticipated the accompanying dot plot would still lean hawkish.
The call placed TD among a wider group of major banks that abandoned earlier expectations for the Fed to hold rates steady through the remainder of 2026 after the same CPI report, though TD’s specific timeline, three hikes concluding in January 2027 rather than the more common two hike, December endpoint forecast at the time, made it one of the more aggressive calls on the street heading into the meeting. The September hike itself has since been delivered as TD and most of the market expected, taking the fed funds range to 3.75% to 4.00%. What remains to be tested is the second half of TD’s call, the specific timing of October and January moves, against a Fed dot plot that pointed to only one additional hike this year rather than two, a detail that puts TD’s January leg of the forecast somewhat ahead of the central bank’s own median guidance.
Whether TD has revisited or reaffirmed that October and January sequencing since Wednesday’s meeting and dot plot release is not yet clear from available reporting, and any update the desk publishes in the coming days would be the new update, and would be the more immediate test of whether this call holds up against the Fed’s own signalling.
This article was written by Eamonn Sheridan at investinglive.com.