Aggressive easing call collides with cautious market and mortgage rate uncertainty
Investors largely penciled in a gentle glide path for US interest rates, with futures implying only a couple of quarter‑point cuts by year‑end. But hedge fund manager David Einhorn argued that script is too timid, and that the Federal Reserve would end up cutting “substantially more than two” times.
His view runs counter to the market’s base case, which had traders pricing in roughly two 25‑basis‑point reductions, with CME FedWatch probabilities north of 80% for that outcome at the time of his comments. That discrepancy underscores a growing divide between investors who trust the Fed’s own projections and those who believe the central bank would be forced into a looser stance if growth or credit conditions weakened further.
“The market viewing the latest jobs figures as a reason not to cut is wrong,” Einhorn said in a CNBC interview with Sara Eisen.
“I think by the time we get to the end of the year, it’s going to be substantially more than two cuts.”
A surprise US jobs beat dims hopes for a March Fed rate cut.
— Mortgage Professional America Magazine (@MPAMagazineUS) February 11, 2026
Explore how mixed labor signals are shaping Fed policy and mortgage market expectations for 2026.https://t.co/qBFSWjesbg#economy #FederalReserve #jobsreport #monetarypolicy
Fed expectations and mortgage rate paths
Einhorn tied his call partly to the policy stance of Kevin Warsh, then expected to succeed Jerome Powell as Fed chair, arguing that Warsh would make the case for easing even in a still‑firm economy.
“If we have 4% or 5% inflation, sure, then he won’t be able to persuade people, but otherwise he’s going to argue productivity,” Einhorn said. In his view, the next chair would be prepared to cut “even if the economy is running hot.”
Market‑implied odds have repeatedly swung with each inflation print and jobs report, but recent history suggested mortgage professionals could not take any path for granted.
When the Fed delivered a 25‑basis‑point cut late last year, brokers told Mortgage Professional America that even a widely expected move still helps “boost buyer confidence” by signaling that “the worst of the rate pressure may be behind us,” even if mortgage rates do not immediately fall in lockstep.
Mortgage market weighs another shift
At the same time, some industry veterans warned that forecasting the exact rate trajectory has become close to impossible. One long‑time originator told MPA there is “too much noise” in politics, trade policy and data revisions for anyone to have a firm view beyond a few meetings, even as softer jobs numbers and prior Fed cuts help nudge mortgage rates lower.
Still, Einhorn called positioning for deeper easing “one of the best trades out there right now,” pointing to his long exposure in Secured Overnight Financing Rate futures – a direct bet that short‑term benchmark rates would drift lower over time. He argued that, once the Fed moved past its reluctance to cut, market pricing would have to adjust sharply.
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