Hassett, supporting Trump, expects interest rate cuts, but his viewpoint lacks independent value.
by VT Markets
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Jul 30, 2025
Hassett is currently the director of the National Economic Council under Trump, focusing mainly on promoting the administration’s viewpoints.
He has mentioned the chance of new trade agreements, but any final decisions will rest with Trump.
The Fed’s Direction and Market Effects
We shouldn’t get too caught up in what officials say about Federal Reserve policy. The real message comes from the top, which can create confusion and pressure on the central bank. With the latest Consumer Price Index (CPI) sitting just over 3% and Q2 GDP growth at only 1.5%, the Fed’s direction seems quite uncertain.
This uncertainty means we should consider options on interest rate futures. Implied volatility is likely to increase before the next FOMC meeting. The market is expecting rate cuts that might not align with Fed data, creating a gap worth trading. We saw something similar in 2019, when pressure from the White House often led to market swings around Fed decisions.
More trade deals could happen, but the journey will likely be uneven and depend on one person’s choices. We’ve seen this already in early 2025 with new tariffs on certain goods from Southeast Asia, leading to a 4% drop in U.S. exports to that region last quarter. This unpredictability is crucial to watch.
Strategies for Market Volatility
The best strategy is to hedge against sudden shifts in specific sectors, like industrials and technology, which react strongly to supply chain news. The VIX has been high, averaging around 21 over the past month, indicating that the market is already factoring in this political risk. It may be wise to buy protection through puts on related ETFs when the VIX drops.
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by VT Markets
Jul 30, 2025
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