Stephen Miran anticipates 50 basis point reductions at each Federal Reserve meeting this year, according to his dot plot. His projections align with a stance that suggests potential support for Trump’s economic policies.
Miran is due to appear on CNBC shortly, which may offer additional context on his economic viewpoints. Observers are keen to see his response to potential criticism during the interview.
Addressing The Market
With a Fed governor now openly pushing for 50 basis point cuts at every remaining meeting in 2025, the front end of the curve is the most obvious place to act. We should be looking at adding to long positions in SOFR futures for the December 2025 and March 2026 contracts. This kind of talk, whether it’s a trial balloon or not, will force the market to price in a more aggressive cutting cycle.
This stance is particularly bold given that the August 2025 CPI report showed inflation is still sticky at 2.8%, which is well above the Fed’s target. However, with the last jobs report showing payrolls slowing to 150k and unemployment ticking up to 4.2%, he has some cover for his dovish argument. The market is currently pricing in only about 75 basis points of cuts by year-end, creating a clear discrepancy we can trade.
We see this as a catalyst for a significant rise in interest rate volatility, which has been fairly low for most of this year. The MOVE index, a key measure of bond market volatility, is sitting near its 2025 lows, making long volatility plays look cheap. Buying calls on the VIX ahead of the next FOMC meeting could be a smart way to position for the market uncertainty this will create.
Pressure On The US Dollar
A Fed cutting this aggressively while other central banks like the ECB hold firm would put immense pressure on the US dollar. We are reminded of the market dynamics in late 2018 when the Fed paused its hiking cycle, leading to a temporary dollar slump. We should consider buying cheap, out-of-the-money call options on EUR/USD expiring in December.
The equity market will interpret this as a massive green light, especially for rate-sensitive tech and growth stocks. The Nasdaq has been trading in a tight range for most of the third quarter of 2025. This could be the jolt needed to break higher, so we are looking at call spreads on the QQQ to position for a potential year-end rally.
