JPMorgan Chase CEO Jamie Dimon sharpened his warning that a global bond sell-off could begin squeezing corporate borrowers, saying the world's massive competition for capital may push up the cost for companies to refinance or raise new debt. "There will be a point where the market will ask for more and more and more, and yeah, at one point that'll feed into corporate debt, corporate credit spreads, and things like that, which is how it normally happens," Dimon said in a Bloomberg interview on the sidelines of a JPMorgan event in London. He added that the best approach is to deal with such risks before they become a crisis, warning that a crisis would be handled "in a much less pleasant way." The warning comes as a global rout in bonds has pushed longer-term borrowing costs sharply higher, with the benchmark US 10-year Treasury yield recently surpassing heights not seen since 2002, after the start of the Iran war drove inflation materially higher. Credit markets have already shown signs of stress, with the spread for insuring US junk bonds widening significantly in the credit default swap market in recent weeks, according to LSEG data compiled by Yardeni Research. Dimon has made versions of this argument for months, including in JPMorgan's April shareholder letter, where he warned that spending on AI, defense, and infrastructure, along with large government deficits, should keep upward pressure on borrowing costs.
JPMorgan Chase & CoDimon warns rising bond yields and competition for capital will squeeze corporate credit, pressuring JPMorgan's lending/credit exposure.
Article notes the 10-year Treasury yield surpassed levels not seen since 2002 amid a global bond rout, implying higher yields.
