The US Michigan Consumer Expectations Index for April came in above expectations. The forecast was 46.1 and the actual reading was 48.1.
We are looking back at the Michigan Consumer Expectations beat from April of last year. That surprising strength in 2025 preceded a period of stubborn inflation that kept the Federal Reserve hawkish for longer than anticipated. This past pattern is a useful guide for our current market positioning.
Historical Signal And Market Context
Today, the situation is complicated by conflicting signals. The latest March 2026 CPI report showed core inflation holding at a sticky 3.7%, while recent retail sales figures have been flat. This creates significant uncertainty about the Fed’s next move and the health of the economy.
Given this uncertainty, traders should consider buying protection against increased market swings. Options on the VIX index, with the VIX itself recently climbing towards 19, offer a direct way to position for higher volatility in the coming weeks. This is a prudent move when economic data is sending mixed messages.
We should also be positioned for the possibility of interest rates staying higher for longer. Buying put options on long-duration Treasury ETFs, like TLT, provides a hedge against a hawkish surprise from the Fed. This strategy would benefit if bond prices fall due to persistent inflation fears, a scenario we saw play out in late 2025.
With consumer strength now in question, we should look at options on the consumer discretionary sector. Buying puts on ETFs like XLY could be effective if spending continues to weaken as we head into the summer months. The market seems too optimistic on the consumer’s health right now.
