JPMorgan Chase CEO Warns: U.S. Bond Market May Face Turmoil, Federal Reserve Could Be Forced to Intervene Again

According to CoinDesk report

JPMorgan Chase CEO Jamie Dimon recently warned that the nearly $30 trillion U.S. Treasury market may soon face “turmoil,” and that the Federal Reserve (Fed) may ultimately have to repeat the liquidity measures taken in early 2020 during the COVID-19 pandemic. Jamie Dimon stated during Friday’s earnings call:

“Due to excessive regulatory rules, the Treasury market is bound to experience a movement. The Fed will not act prematurely unless they start to feel a bit panicked.”

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Rising Pressure in the Bond Market, Banks Struggle to Intervene

Market Awaits Federal Reserve Intervention

Rising Pressure in the Bond Market, Banks Struggle to Intervene

Jamie Dimon’s comments come at a time when U.S. bond yields are surging and market volatility is intensifying. Rising yields indicate that investors are selling bonds or exiting certain arbitrage strategies (such as the spread trading between U.S. Treasuries and futures), exacerbating the market pressures that were already heightened due to the escalating U.S.-China trade war.

He pointed out that current regulations prevent banks from flexibly stepping in to buy when liquidity is drained, similar to the situation in early 2020 when the Fed had to engage in massive bond purchases to keep the market functioning. Jamie Dimon called for urgent reforms to the regulatory framework to allow banks to play a more proactive intermediary role in the Treasury market. One specific reform is to exclude U.S. Treasuries from the leverage ratio calculation for banks, enabling financial institutions to purchase more Treasuries without capital constraints. Jamie Dimon stated:

“If these rules are not amended, the Fed will have to intervene in the market personally, which is a very undesirable policy direction.”

Market Awaits Federal Reserve Intervention

The U.S. Treasury market is one of the core components of the global financial system, and its price trends affect key parameters such as mortgage rates and corporate bond yields. Jamie Dimon warned that if the Treasury market fails again, its ripple effects could impact the overall economy.

In a similar situation in 2020, the Fed quickly initiated a multi-trillion dollar bond-buying program to prevent a market collapse, during which Bitcoin (BTC) prices also surged. As a result, many investors are anticipating that if the Treasury market experiences systemic issues again, leading to Fed intervention, the market’s demand for Bitcoin as a safe haven may rise again, subsequently driving up its price. However, some analysts believe that the significant rise in Bitcoin in 2020 was also driven by multiple factors, including that year’s “halving event.”