JPMorgans CEO Warns Fed May Need to Rescue Treasury Market
There will be a kerfuffle in the Treasury markets because of all the rules and regulations, Dimon said during JPMorgans Friday earnings call. The Fed wont act until they start to panic a little bit.
Rising Yields and Liquidity Stress Fuel Dimons Concern
Dimons remarks come amid surging bond yields and rising market volatility, largely driven by trade tensions between the U.S. and China. Investors have recently backed away from arbitrage trades between Treasuries and futures contracts, putting pressure on market liquidity.
The JPMorgan CEO pointed to regulatory restrictions that prevent banks from stepping in to absorb Treasuries during periods of stressa key issue during the 2020 pandemic meltdown, when the Fed had to inject trillions into bond markets to restore order.
Dimon Urges Rule Changes to Avert Central Bank Bailout
One solution Dimon supports is removing Treasuries from bank leverage ratio calculations, a change that could free up capital and allow banks to act as market stabilizers without breaching regulatory limits.
If they dont, the Fed will have to intermediate, which I think is just a bad policy idea, he warned.
Why It Matters
The U.S. Treasury market forms the bedrock of global finance, impacting mortgage rates, corporate borrowing costs, and global economic stability. Dimon warned that another liquidity freeze, like in 2020, could trigger ripple effects across the entire economy.
With trade war uncertainties and interest rate expectations already rattling markets, Dimons comments signal growing concern among top financial leaders that systemic cracks may be forming again.
The post JPMorgans CEO Warns Fed May Need to Rescue Treasury Market appeared first on Coindoo.
Read more: https://coindoo.com/jpmorgans-ceo-warns-fed-may-need-to-rescue-treasury-market/
Text source: Coindoo
