US consumer sentiment edged up in April, as the Conference Board’s Consumer Confidence Index rose to 92.8 from 92.2 in March.
The Present Situation Index fell by 0.3 points to 123.8, based on views of current business and labour market conditions.
Shifting Expectations And Market Implications
The Expectations Index increased by 1.2 points to 72.2, reflecting the short-term outlook for income, business, and labour market conditions.
Markets showed little reaction to the release. At the time of press, the US Dollar Index was up 0.25% on the day at 98.74.
Looking back at this time last year, in April 2025, we saw a small rise in consumer confidence. The important signal, however, was the growing gap between how people felt about the present and their worries about the future. This split foreshadowed the economic slowdown we experienced in the later half of 2025.
Today, that cautious outlook from last year seems justified, with recent data showing GDP growth slowing to 1.6% in the first quarter of 2026. At the same time, we’re still battling a stubborn core CPI that has hovered around 3.1%, putting the Federal Reserve in a difficult position. This situation creates significant uncertainty for the market’s direction over the next few months.
Positioning For Volatility And Downside Risk
This uncertainty is reflected in the CBOE Volatility Index (VIX), which has been trading in a higher range, recently averaging near 19. For the coming weeks, we see opportunities in strategies that benefit from price swings, such as purchasing straddles or strangles on major indices like the S&P 500. These positions can be profitable whether the market moves sharply up or down on the next inflation report or Fed announcement.
Given the continued weakness in consumer expectations, hedging against a downturn in consumer spending remains a prudent move. We are considering buying put options on consumer discretionary ETFs, which could provide downside protection if retail sales data comes in weaker than expected. This acts as a relatively low-cost insurance policy against a further softening in the economy.
