TD Securities said markets are focused on President Trump’s State of the Union Address at 9pm EST and a series of Federal Reserve speakers. The speakers listed are Goolsbee, Bostic, Waller, Cook, Barkin and Collins.
The bank said trading may be choppy ahead of the address, with attention on the economy, tensions with Iran and a Supreme Court ruling on the legality of IEEPA. It also flagged a US 2-year Treasury auction scheduled for the afternoon.
Consumer Confidence In Focus
TD Securities expects the Conference Board consumer confidence index to come in at 85.5, below the 87.0 consensus. It follows a drop to 84.5 in January.
It said Morning Consult data does not show clear improvement in sentiment at the start of February. It also pointed to volatile equity moves and rising petrol prices in the first half of the month.
Another focus is the “labour differential”, which it said has shown weaker job-finding expectations, in line with the New York Fed. It added that hiring has remained subdued despite recent labour market stabilisation.
Market focus is now on this week’s upcoming consumer confidence report and remarks from several Federal Reserve officials. We anticipate the Conference Board index will miss expectations, possibly coming in below 102.0. This view is shaped by recent equity market turbulence and rising costs at the pump.
Positioning And Volatility
We remember the market choppiness back in 2025, when political events often created short-term volatility ahead of key economic data. While the political drivers are different now, the market is similarly cautious as it positions itself ahead of this week’s key risk events. Several Fed officials, including Vice Chair Jefferson and Governor Waller, are scheduled to speak.
We expect a weaker-than-consensus reading for February’s consumer confidence after it fell sharply to 101.5 in January from its high in late 2025. The S&P 500 has seen a 4% pullback in recent weeks, which often weighs on household sentiment. Furthermore, data from the EIA shows national average gasoline prices have climbed to $3.45 per gallon, another headwind for consumers.
The labor market will be a critical component of the report, particularly the “labor differential” between jobs being plentiful versus hard to get. The latest JOLTS data showed job openings have fallen for three straight months, a sign of cooling demand for workers. This slowing hiring trend, which we saw develop in late 2025, keeps the pressure on the Fed for a more dovish tilt.
Given this backdrop, traders should consider positioning for potential downside in US equities and a weaker dollar. Buying puts on the SPY or QQQ ETFs could provide a hedge against a negative confidence surprise. For currency traders, options strategies that bet on a decline in the Dollar Index (DXY), like buying puts or establishing put spreads, could be timely.
We also anticipate a rise in implied volatility leading into the data releases and Fed speeches. This suggests that buying VIX calls or establishing long straddles on major indices could be profitable if the market reacts sharply. These positions benefit from a large price move in either direction, capitalizing on the current uncertainty.
