Stephen Miran has been appointed temporarily to the Federal Reserve Board. He will replace Kugler and serve until January. The US Senate banking committee voted 13-11 to push his nomination to the full Senate, with a vote expected on Monday, September 15, according to Politico.

Expectations for the Vote

The vote is likely to pass but may split along party lines, according to two anonymous sources. The Federal Open Market Committee (FOMC) is set to meet on September 16-17. A 25 basis point rate cut is widely expected, even if Miran hasn’t joined the committee by that date. With the confirmation vote for Stephen Miran coming up on Monday, the market has already factored in this 25-basis-point rate cut for the September 17 meeting. Traders are more focused on the uncertainty he may bring for the meetings in November and December. This expected rate cut is backed by recent data. The August jobs report showed payrolls growing by 160,000, and core PCE inflation for July dropped to 3.4%. However, Miran has argued for a “higher-for-longer” approach to keep inflation in check. Even for a short duration, his presence may pose a hawkish risk to a Fed that the market thinks is turning doveish.

Market Implications

We can expect an increase in implied volatility, particularly for options related to the November and December FOMC meetings. Currently, the VIX is around 13, its lowest level in years, which means any unexpected comments could cause a significant spike. Traders might consider buying short-term VIX calls or setting up strangles on interest-sensitive ETFs. The derivatives market for federal funds futures is where we will see the most direct reactions. While September contracts remain steady, we might see the December 2025 and March 2026 contracts adjust to show a slightly lower chance of additional cuts. This could create opportunities for trading spreads between short-term and long-term rate expectations. In the mid-2010s, the market had a tough time predicting the Fed’s path when new members joined the board. Every comment from new members led to short-term volatility. We expect a similar situation in the coming weeks with any news about Miran. Since Miran’s term ends in January, the disruptions should be brief. Therefore, any strategies focused on volatility should have a clear timeline, especially for options expiring before the year ends. The key here is the uncertainty, not a fundamental long-term change in Fed policy. Create your live VT Markets account and start trading now.

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