Jamie Dimon warns of ‘bond crisis’ ahead as global debt risks build

JPMorgan Chase CEO Jamie Dimon warned on Tuesday that rising government debt levels could trigger a crisis in the bond market and urged policymakers to act before markets force his hand.

Dimon’s statement came in response to a question about whether he was concerned about rising government debt “around the world and in your country.”

“The way things are going right now, there’s going to be some kind of bond crisis and then we’re going to have to deal with it,” Dimon told an investment meeting. conference It is held by Norway’s sovereign wealth fund, the world’s largest.

“I’m not that concerned that we’ll be able to handle this,” Dimon said. “I think maturity should tell you that you have to deal with it instead of letting it happen.”

Dimon, who runs the world’s largest bank by market value, said history shows today’s growing mix of risks can combine in unpredictable ways. While the timing is uncertain, failure to respond to these pressures raises the possibility that adjustments will follow turbulence rather than deliberate policy moves.

“The level of things that contribute to the risk column, like geopolitics, oil, government deficits, are high,” Dimon said. he said. “They might go away, but they might not go away, and we don’t know what combination of events is causing the problem.”

A bond crisis will likely mean a sudden jump in yields and a deterioration in market liquidity, with investors selling hastily and buyers pulling back, causing central banks to step in as buyers of last resort.

A recent example is the UK gilt crisis of 2022, when yields rose and the Bank of England had to intervene to stabilize the market.

In the wide-ranging interview, Dimon touched on the risks he sees in the credit cycle, the pace of AI adoption, and his insights into building corporate culture.

While he doesn’t think nearly $1.7 trillion in private credit is large enough to pose a systemic risk to the U.S. economy, he said the bigger risk is that a downturn across all credit categories will be harsher than expected.

“We haven’t had a credit recession in a long time, so if one were to happen it would be worse than people think,” Dimon said. “It could be scary.”