Debt market storm warning continues! JP Morgan CEO Jamie Dimon: interest rates may rise sharply.

Jamie Dimon, chairman and CEO of JPMorgan Chase, warned that interest rates could rise significantly from their current levels. As US Treasury yields hit multi-year highs, these remarks also sounded an alarm for bond investors. Dimon stated, "Interest rates could be much higher than they are now. We may have already transitioned from a state of excess savings to a state of insufficient savings." At a time when global long-term bonds are facing downward pressure due to concerns that rising oil prices could lead major central banks to raise interest rates, fears of fiscal expansion in the US, UK, and Japan, combined with the AI boom boosting the US economy potentially leading to a tightening of Fed policy, multiple factors are resonating, prompting investors to demand higher returns for holding long-term bonds. Dimon said, "Bond interest rates could rise. It is a mistake to think that bond interest rates will never rise. Companies like ours are prepared for both rising and falling interest rates." This week, the 30-year US Treasury bond yield rose to its highest level since 2007, while the 2-year US Treasury bond yield also climbed to its highest level since February 2025. Market trends reflect fears of escalating Iran tensions driving inflation and the hidden risks of the US fiscal deficit. As the Middle East conflict is unlikely to be resolved in the short term, traders expect a high probability of a 25 basis point rate hike by the Fed before December, and it is almost certain that a 25 basis point rate hike will occur by March next year. Swap trading data shows that before the outbreak of the Iran war, the market expected the Fed to cut rates twice by the end of the year, each time by 25 basis points. "The US government debt has reached $30 trillion with an average interest rate of 3.5%. Even today, they cannot refinance at a rate lower than this," Dimon said. "They have to refinance another $2 trillion this year, but the problem is we don't know when the world will panic about it, and we don't know when inflation will make people unwilling to hold long-term bonds." He added that this impact will also spill over into the credit markets. Dimon said, "Interest rates could easily continue to rise, and credit spreads could widen further. Many people will have to refinance at higher rates in the future." Several industry experts have previously issued risk warnings. Citi's macro interest rate strategist Jim McCormick bluntly stated that as inflation concerns spread in the market, bond traders are targeting a key level of 5.5% for the 30-year US Treasury bond yield. TS Lombard's chief US economist Steven Blitz warned that the US 10-year bond yield could rise to 6%, and believes that the long-term bear market in government bonds may have just begun.