Dimon: "If U.S. national debt increases further, bond market turmoil and serious problems will follow"

Korea Economic Daily

Summary

Jamie Dimon, CEO of JPMorgan Chase, emphasized that an increase in the U.S. national debt could cause significant problems for the bond market.
Dimon stated that as the national debt rises, credit spreads would widen, impacting all entities raising capital, such as small business loans and high-yield bonds.
Recently, changes in U.S. fiscal policies have led to increased bond market volatility, with investors urged to be cautious of these developments.

Widening Credit Spreads and Impact on All Borrowing Parties

Jamie Dimon, CEO of JPMorgan Chase, emphasized that "an increase in the U.S. national debt will cause major problems that will lead to a difficult period for the bond market." He said that if government bond debt increases, credit spreads will widen further.

According to foreign press reports such as Reuters on the 2nd (local time), CEO Dimon made these comments in an interview with Fox Business that day. This statement aligns with his previous warnings that the U.S. government's fiscal deficit—possibly worsened by tax cuts—could trigger greater market turmoil.

“People may decide the U.S. dollar isn’t appropriate, in which case there could be a gap in credit spreads. This is a serious issue,” said Dimon. He noted that "this also hurts those raising capital." He emphasized, "This includes small businesses, small business loans, high-yield bonds, leveraged loans, and real estate loans—all of which are impacted—so the volatility of the bond market is a concern."

In recent weeks, changes in U.S. economic policy have caused a plunge in the bond market. This implies a rise in bond yields.

The Trump administration is pushing to pass the so-called 'one big, beautiful bill,' with tax reform at its core, and the bill is expected to further worsen the U.S. fiscal deficit this year.

The 69-year-old Dimon has steadily served as an advisor to the U.S. administration during times of financial crisis. During the 2024 presidential election, his name was mentioned for high-level economic posts such as Secretary of the Treasury, but he remained at the bank.

Dimon has managed America's largest bank for over 19 years, longer than many other CEOs.

Asked about succession planning, Dimon replied, "It will take a few more years." He added, "When the time is right, I may serve as chairman or managing director for a few more years. I love what I do."

Jung-A Kim, contributing reporter kja@hankyung.com