Insights 
VT 
Stephen Miran joined the Federal Reserve today, finalised as a Fed Governor just before the Federal Open Market Committee (FOMC) meeting. Former President Trump noted the need for the Fed’s independence as Miran, who was his chief economist and chair of the Council of Economic Advisers, received the final presidential signature without resigning from his former role.
The immediate question concerning Miran is his stance on interest rate adjustments. It remains to be seen if he will support a 25 basis points (bps) cut or advocate for an immediate 50 bps cut.
The Impact of Miran’s Appointment
With Stephen Miran joining the Fed, we should assume the central bank’s dovish wing just gained a powerful and politically-connected member. The debate is no longer about whether the Fed will cut rates, but by how much and how soon. This political appointment fundamentally shifts the odds toward more aggressive easing, regardless of what some of the data says.
This move comes as the economy is already showing signs of slowing, making a rate cut easier to justify. We saw Q2 2025 GDP growth revised down to a sluggish 1.5%, and the latest jobs report for August 2025 showed unemployment ticking up to 4.1%. Miran’s presence provides the political cover to use this data to push for significant cuts immediately.
The most straightforward trade is to expect higher market volatility. With the Fed’s reaction function now tied to political pressure, its future actions are far less predictable, so we are buying front-month VIX futures. We anticipate the VIX, which has been hovering around 16, to re-test the 20 level as the market prices in this new uncertainty around Fed independence.
Positioning for Lower Interest Rates
We are positioning for lower interest rates across the curve, with a focus on the front end. The 2-year Treasury yield, which is extremely sensitive to Fed policy, is the key indicator to watch. We expect SOFR futures contracts for the December 2025 and March 2026 meetings to price in at least an additional 25 basis points of cuts within the next week.
This isn’t a new situation for us; we saw a similar playbook run back in 2019. After sustained political pressure from the White House back then, the Fed reversed its hiking cycle and began cutting rates. The historical parallel suggests that this kind of direct political appointment will accelerate a pivot to easier monetary policy.
A more aggressive Fed points directly to a weaker U.S. dollar. As the market digests the increased likelihood of deeper rate cuts compared to the European Central Bank or the Bank of England, we should see capital flow out of the dollar. We are looking at buying call options on the Euro and British Pound against the dollar, targeting strikes that are 2-3% above the current spot price.
