Jamie Dimon warns that the American bond market “cracks” under pressure from the increase in debt

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Jamie Dimon warned that the US bond market “cracks” under the weight of the country’s growing debt when it called on the administration of Donald Trump to place America on a more sustainable trajectory.

Friday, the CEO of JPMorgan Chase said that he had warned the regulators: “You will see a crack on the bond market.” He added: “I tell you it will happen. And you will panic. I’m not going to panic. We will go well.”

The warning of the leader of the largest bank in the United States on the growing risks for the US bond market – which results in borrowing costs for billions of dollars of debts worldwide – underlines how Wall Street is increasingly worried about the increase in public debt. This occurs while the Congress examines the “big and beautiful” Trump budget bill which, if it is adopted, should considerably increase the federal deficit.

Even before the introduction of the legislation, which was voted by the House last week and was being examined in the Senate, the Congressal Budget Office had provided that the American debt as a part of the GDP would exceed the peak of the 1940s in the years to come.

The long-term American bonds have undergone pressure on tax concerns, the yield of the treasury at 30 years negotiating at around 5%, against just over 4% at the beginning of 2024. The rating agency Moody’s also stripped this month on its triple-A credit rating.

The Treasury bond market increased from around $ 5 billion in 2008 to $ 29 billion today, while the government has reduced taxes while increasing spending, especially during the coronavirus pandemic. The market is the deepest and most liquid in the world and has long benefited from the privilege of the dollar being the world reserve currency.

But as the loading of the debt has increased, demand also took a hit. Foreign investors have regularly withdrew from the treasury market over the past decade, a decision that has been acquired by Trump’s pricing policy.

Dimon said that the increase in geopolitical tensions, trade wars and levels of debt on the world meant that the “tectonic plates” of the world economy were changing.

“I just do not know if it will be a crisis in six months or six years,” he told the California national reagan, calling on the government to “modify the debt trajectory” and urging regulators to mitigate the restrictions on banks to increase their ability to negotiate bonds. “I think we can improve everything, including this, changing and modifying some of these rules and regulations.”

His comments echo those of the president of Goldman Sachs, John Waldron, who, earlier this week, described the deficit increasing from the United States as “somewhat worrying” and warned its impact on the bond market was “the big risk on the macro at the moment”.

“I think we are going to execute more important deficits quite clearly, with regard to the eye, and we are going to have more borrowings from the treasure,” said Waldron, who is the second Goldman commander behind David Salomon. “The large risk is that long-term rates continue to safeguard and the cost of capital in the economy increasing and fundamentally becomes more and more braking on economic growth,” he told the Bernstein conference in New York.

The Trump budget bill would add at least 3.3 TN to American debt by 2034, according to the independent committee for a responsible federal budget. Moody’s warned that the bill would pass the American deficit from 6.4% of GDP last year to just under 9% by 2035.

Dimon has also said that the United States should increase the interests transported, a provision of the tax code which benefits leaders of investment.

Trump approved the idea, which has long been a goal of the Democrats, including former President Barack Obama. “We should absolutely impose interests carried,” said Dimon. When asked if he would plan to run for the elections, Dimon, 69, said he would be “if I thought I could really win, which I don’t think I could”.