United States: Sideways growth and oil shock risks – TD Securities
TD Securities expects US output growth to move sideways in 2026 as the prior Oil shock lingers and the Iran conflict poses stagflationary risks. GDP is forecast to end 2026 at 2.1% Q4/Q4, with unemployment around 4.2%. The bank assigns a 25% probability to a US recession over the next year.
TD Securities anticipates US economic growth to stay stagnant in 2026 due to the ongoing oil shock and the threat of an Iran conflict, both of which could lead to stagflation. The bank predicts GDP growth to end at 2.1% for the period ending in Q4 2026, with a low unemployment rate of around 4.2%. There is a 25% chance of a US recession occurring within the next year.
The bank expects output growth to remain flat this year, with GDP growth slightly below its trend. Stable growth could maintain a low unemployment rate of 4.2% by the end of 2026. The Iran conflict adds to the risks, keeping the Federal Reserve on standby throughout the year. A 25% probability is assigned to a US recession over the next year.
FXStreet Insights Team, comprising skilled journalists, compiles market observations from respected experts, including commercial insights and additional analysis from both internal and external analysts. AUD/USD maintains its bid tone, reaching a fresh four-month high near the 0.7220-0.7230 range on Monday. The pair's upward trend is influenced by the bearish trend in the Greenback, which persists due to ongoing tensions in the Middle East.
Meanwhile, USD/JPY continues to weaken and remains close to seven-month lows near 154.00 as bets on a Bank of Japan (BoJ) rate hike and repatriation speculation increase, while the Greenback's strong stance adds to the overall bearish sentiment. Gold continues its downward trend, regaining some stability near the $4,400 mark per troy ounce on Monday, following the decline in the Greenback and cautious market sentiment prior to key US economic data releases at the end of the week.
The oil market appears more stable than it was a few months ago, but diesel is signaling a different story. The US diesel crack spread, which measures the premium of ultra-low sulfur diesel futures over West Texas Intermediate (WTI), has surged above $100 per barrel for the first time, reaching an intraday high of just over $102.00.
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