Jamie Dimon says crack in the bond market is ‘going to happen’

Dimon has said repeatedly in recent years that he is concerned about global deficit spending, and when asked Friday if so-called bond vigilantes are back, he said “yeah.”

Jamie Dimon warned that a crack in the bond market is “going to happen” after the US government and Federal Reserve “massively overdid” spending and quantitative easing.

“I just don’t know if it’s going to be a crisis in six months or six years, and I’m hoping that we change both the trajectory of the debt and the ability of market makers to make markets,” the JPMorgan Chase & Co. chief executive officer said Friday at the Reagan National Economic Forum. “Unfortunately, it may be that we need that to wake us up.”

US Treasuries are on track for their first monthly loss this year as President Donald Trump’s abrupt policy shifts shake investor confidence. Worry about the budget deficit picked up in May tied to a tax-cut bill moving through Congress. Dimon has said repeatedly in recent years that he is concerned about global deficit spending, and when asked Friday if so-called bond vigilantes are back, he said “yeah.”

The longtime boss of the biggest US bank echoed comments he made last month, when he said he expects a “kerfuffle” in the Treasury market that prompts a Fed intervention. At the time, he cited US banks’ supplementary leverage ratio and other regulations with “deep flaws” that, if fixed, would allow banks to more actively intermediate.

“I tell this to my regulators,” Dimon said Friday. “I’m telling you it’s going to happen, and you’re going to panic. I’m not going to panic, we’ll be fine. We’ll probably make more money and then some of my friends will tell me that we like crises because it’s good for JPMorgan Chase — not really.”