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    Consumer Expectations Index for Michigan in the US is 51.7, slightly below forecasts

    by VT Markets
    /
    Sep 27, 2025

    Investor Research and Risks

    Before making any investment decisions, investors should do their own research. FXStreet does not guarantee that information is always accurate, so it’s important to understand the risks involved, including the possibility of losses. This article does not provide recommendations on specific market instruments or assets. The views expressed are those of the author, and no payment has been received beyond what FXStreet has provided.

    Market Sentiment and Strategies

    We’ve noticed a drop in market sentiment after the recent government report showed that retail sales fell by 0.2% in August. This is the first decline in several months. This slowdown likely results from the Federal Reserve’s policy of keeping interest rates steady near 5.0% for over a year to fight inflation, which is still at 3.1%. The impact of these high rates seems to be affecting household budgets. In the upcoming weeks, consider buying put options on consumer discretionary ETFs like XLY. This sector includes non-essential goods and travel, which typically gets hit hard when consumer confidence drops. Targeting companies with high price-to-earnings ratios in this area may offer good chances for bearish investments. Another strategy is to buy call options on the VIX, which is currently priced low at around 14. We saw in 2022 how quickly the VIX can rise above 30 when economic uncertainty creates market fear. This approach provides an affordable way to protect against a possible market decline due to weak consumer data. For a more cautious strategy, we could consider pair trades, such as going long on consumer staples (XLP) while shorting consumer discretionary (XLY). This method can benefit from a shift into defensive sectors, even if the overall market does not experience a significant drop. People will continue buying groceries and medicine, making staples a safer choice in this environment. Create your live VT Markets account and start trading now.

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