Allianz's Mohamed El-Erian: Firings have a way of spreading through the economy

Market Reaction to Fed Rate Cut - Treasury market experienced volatility, with the 10-year yield initially dropping below 4% following the rate cut decision, then rising to 4116% [2] - Market's upward yield adjustment is attributed to strong jobless claims data and a reassessment of the support for further rate cuts [2][3] Fed's Policy and Economic Outlook - The Fed's rate cut is viewed as a risk management measure, prioritizing employment risks over inflation risks [4] - The Fed is perceived to be placing greater emphasis on the employment side of its mandate compared to inflation [4][6] - The Fed is projected to miss its inflation target for seven consecutive years, with inflation exceeding the target by more than 50 basis points (05%) in six of those years [7] Risks and Concerns - The primary risk to the economy is on the employment side, with concerns about companies transitioning from hiring hesitancy to layoffs [5] - There are concerns about the potential for a "cliff effect" if companies begin firing employees, which could spread through the economy [5]