JPMorgan’s Jamie Dimon warns about a ‘crack’ in the U.S. bond market

JPMorgan Chase (NYSE:JPM) Chairman and CEO Jamie Dimon has warned that the rising federal debt can threaten the U.S. bond market unless the government takes remedial measures.

“You are going to see a crack in the bond market,” Dimon said on Friday at the Reagan National Economic Forum in California, according to The Financial Times. “I’m telling you this is going to happen.”

His comments came as President Donald Trump’s sweeping multi-trillion-dollar tax breaks package makes its way through the Senate after clearing the House by a narrow margin last week.

According to the independent Committee for a Responsible Federal Budget, the legislation dubbed the “big, beautiful” bill is expected to increase the U.S. deficit to nearly 9% of GDP by 2035, up from 6.4% last year.

This month, the influential ratings firm Moody’s downgraded America’s pristine sovereign credit rating by one notch from ‘AAA’ to ‘Aa1,’ citing, among other things, the country’s growing debt pile. The 10-year Treasury yield (US10Y) and 30-year (US30Y) Treasury yields spiked in reaction.

“I just don’t know if it’s going to be a crisis in six months or six years,” Dimon noted, urging the government to “change the trajectory of the debt” and calling on lawmakers to ease rules that have restricted banks’ bond trading capacity.

“I think we can make everything better, including that, by just changing and modifying some of these rules and regulations.”