Warning from the 'Emperor of Wall Street' Continuing with Pessimism…"A Crack in the Bond Market Soon"

Korea Economic Daily

Summary

Jamie Dimon, CEO of JPMorgan Chase, warned that a crack may soon occur in the bond market.
CEO Dimon pointed out that U.S. government fiscal spending and the central bank's quantitative easing have been excessive.
CEO Dimon recently focused on rising government bond yields, anxiety in the financial market, and investors betting on rate hikes.

Jamie Dimon, known as the 'Emperor of Wall Street' and the CEO of JPMorgan Chase, has warned that a 'crack in the bond market' could occur soon. He pointed out that U.S. government fiscal spending and the central bank's (Fed's) quantitative easing have been excessive.

According to Bloomberg News and the Financial Times on the 30th (local time), CEO Dimon made this assessment at the 'Reagan National Defense Forum' held in Simi Valley, California, USA, that day.

CEO Dimon said, "Whether it’s in six months or six years, I hope the direction of the debt or the market makers’ abilities will change," and added, "Unfortunately, it seems like we need such things (cracks) for us to realize reality."

Dimon's remarks are seen as reflecting financial market anxieties about the increasing U.S. federal government debt.

When asked if the 'bond vigilantes'—who rapidly sell large amounts of certain government bonds to push up interest rates—seemed to have resurfaced, CEO Dimon replied, "Yes." Rising government bond yields make it harder for the government to borrow, forcing fiscal tightening. The term 'vigilantes' describes how interest rate increases act as a self-regulating force on excessive government deficits. It refers more to investors betting on higher rates than a specific group.

Discussing the U.S.-China trade war, CEO Dimon criticized the U.S. government’s 'poor management.' He said, "There are areas where China, a potential hostile force, is doing well and areas where there are problems, but what I'm really concerned about is 'us,'" adding, "What we talked about today is that (America’s) management is terribly poor."

Recently, CEO Dimon has been consistently expressing pessimism. In an interview with Bloomberg TV on the 22nd, he warned that the U.S. could fall into stagflation, with high prices and a slumping economy. On the 19th, he also warned of asset price declines due to tariffs and geopolitical tensions.

Hankyung.com reporter Han Kyungwoo case@hankyung.com