Consumer Sentiment Sours Economic Outlook as Strait of Hormuz Uncertainty Lingers

• Preliminary April consumer sentiment fell to a record low of 47.6, with 1-year inflation expectations rising to 4.8% and 5-year expectations to 3.4%.
• February factory orders were flat (0.0%), slightly better than the -0.3% estimate, but ex-transportation orders rose 1.2%.
• The Iran-US ceasefire is fragile, with ongoing fighting between Israel and Hezbollah, and oil flow through the Strait of Hormuz remains restricted, contributing to inflationary energy prices.

The discussion highlights a significant drop in preliminary April consumer sentiment and rising inflation expectations, which is 'hard to spin as a positive'. While February factory orders were flat, geopolitical tensions in the Middle East, particularly regarding the Strait of Hormuz, remain a concern for oil flow. Volatility has normalized, but the market faces a risk of dramatic repricing if negative surprises emerge over the weekend.