Michael the manipulator knew that he wanted and needed Connie to "stay close," and to take care of him. He'd asked her to do that when she announced her plans to marry Merle. For him getting this concession from Connie was well worth a brief hug for Fredo and that look he gave Neri. I think it made Fredo think Michael had forgiven him, and made him more comfortable around the compound. Accordingly he became less of a threat ("keep your enemies closer"), and Michael brought Connie "home." In all a win-win for Michael.