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Jamie Dimon, the chief executive of JPMorgan Chase, has said the US bond market is heading for a serious breakdown if Washington doesn’t change course. Speaking at the Reagan National Economic Forum in California, Jamie said, “You are going to see a crack in the bond market, OK? It is going to happen.” He made the statement while criticizing the US government and the Federal Reserve for how far they’ve pushed spending and monetary policy since the pandemic. According to remarks reported by the Wall Street Journal, Jamie believes the government’s debt-driven policies are pushing the system toward instability. At the center of it is a House-passed tax plan supported by President Donald Trump that would blow up the federal deficit by about $2.7 trillion over ten years. The US national debt is already more than $36 trillion. That proposal has freaked out traders, with a spike in 10-year Treasury yields to 4.418% earlier this month and a credit downgrade from Moody’s, which pointed to the government’s “towering pile of debt.” Traders react to growing fiscal risk Jamie said things got unsteady back in early 2020 when Covid-19 shook the system. But the government’s reaction—which worked at first—eventually spiraled. “They massively overdid” the response in the following years, he said, leaving the economy bloated with cheap money and debt. The result now is a bond market that’s showing signs of real stress, starting with a lack of demand at a Treasury auction on May 21. The financial system has also been slowed down by rules put in place after the 2008 financial crisis.  Jamie pointed out that banks have less room to hold bonds under current regulations. That means they can’t easily step in when markets turn shaky. This creates a situation where, if sellers flood the market and there…

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Filed under: News - @ May 31, 2025 4:28 am