JPMorgan Chase CEO Jamie Dimon issued a stark warning this week, predicting a looming crisis in the US bond market driven by the country’s surging national debt. Speaking at the Reagan National Economic Forum in California, Dimon said the current trajectory of US fiscal policy could lead to a severe disruption in credit markets, the Wall Street Journal.
“You are going to see a crack in the bond market, OK?” Dimon warned. “It is going to happen.”
Fiscal alarm over Trump-backed tax plan
Dimon’s concerns are tied in part to a new tax proposal supported by President Trump. The plan, already passed in the House, is projected to widen budget deficits by approximately $2.7 trillion over the next decade. With the national debt already surpassing $36 trillion, bond traders have responded with anxiety, triggering a sharp selloff in US Treasurys.
Yields on the benchmark 10-year Treasury note jumped to 4.418% in May amid tepid demand at recent auctions. Ratings agency Moody’s also downgraded the US credit rating from its top-tier AAA status, citing long-term fiscal deterioration.
Weakened market structure and regulatory challenges
Dimon argued that post-2008 regulations have eroded banks’ ability to serve as market stabilizers during volatility. Banks today have less flexibility to hold government bonds and step in during market disruptions, he said.
“When the Covid crisis hit in early 2020, the government acted quickly to stabilize markets,” Dimon said. “But they massively overdid it in the years that followed.”
Treasury Secretary Scott Bessent and other regulators have said they are exploring ways to ease capital requirements so banks can hold more Treasurys and support market stability. However, Dimon believes reforms are coming too slowly.
“I tell this to my regulators: it’s going to happen, and you’re going to panic,” Dimon said. “I just don’t know if it’s going to be a crisis in six months or six years.”
Threat to dollar’s global status
Beyond the bond market, Dimon raised broader concerns about America’s economic leadership. He warned that continued fiscal mismanagement could jeopardize the US dollar’s status as the world’s reserve currency.
“If we are not the pre-eminent military and the pre-eminent economy in 40 years, we will not be the reserve currency,” he said. “This time we have to get our act together — and do it very quickly.”
He added that while China remains a potential geopolitical rival, the greatest risk may lie within. “What I really worry about is us,” he said. “Can we get our own act together—our own values, our own capabilities, our own management?”
A familiar voice of caution
Dimon has frequently sounded alarms about systemic risks. Earlier this month, he warned that investors were underestimating the long-term consequences of Trump’s trade tariffs, calling the current market mood one of “extraordinary complacency.”
Now, with mounting debt and weakened fiscal discipline, he believes the US is nearing a tipping point. Without decisive action, Dimon warned, the financial system could face another major reckoning.
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