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Warn notices

One of the main reasons, if not the most important one, why the #fed has felt relatively comfortable rising rates, is the fact that the economy is running at full employment. In their goal to kill demand and reduce inflation, one of the collateral damages needs to be higher unemployment. Notably, #ratehikes have not yet permeated into the real economy in full force, but cracks are starting to appear. In the chart below you can see the warn notices companies are obligated to publish before laying off more than 50 people. With the notable exception of California where #tech companies fired employees at the end of last year and during the first half of this one, companies are preparing layoffs in the rust belt (which includes NY and PA) and the sunbelt (which includes all the states east to west of the country). If these layoffs materialize, the market may conclude the Fed has done its job (maybe overdone) and rates will not go higher from here and may not be higher for that long. This phenomenon might be putting pressure on the long end of the curve as well.

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