Posted: September 26, 2023 at 2:59 AM ET
This is what Jamie Dimon, Chairman and CEO of JP Morgan, told the Times of India, a week after the Federal Reserve kept interest rates steady in a range between 5.25% and 5.5%, and announced a final hike in interest rates for this period. Economic cycle.
This makes Dimon considerably more hawkish than his own economists – who expect another rate hike – or the markets in general.
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This is JP Morgan
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Chairman and CEO Jamie Dimon speaks To The Times of Indiaa week after the Fed kept interest rates steady in a range between 5.25% and 5.5% and announced a final hike in interest rates for this economic cycle.
This makes Dimon considerably more hawkish than his own economists – who expect another rate hike – or the markets in general.
Although financial markets do not necessarily envision a world with 7% interest rates, they are now adjusting to a higher, longer-term stance at the Fed.
The yield on the 10-year Treasury note BX:TMUBMUSD10Y jumped another 10 basis points on Monday to the highest level in nearly 16 years. The 30-year yield on BX:TMUBMUSD30Y also rose, reaching its highest level in more than 12 years. The S&P 500 SPX managed to advance Monday despite rising long yields, but the index is 5% below its highs in late July.
In the interview, Dimon said the worst case scenario is for interest rates to reach 7% with stagflation. “If they have lower volumes and higher interest rates, there will be stress in the system. We urge our clients to prepare for this kind of stress,” he said.
However, one concern that Dimon does not share is the combination of social media and digital banking. “Social media and online banking were around during the Great Financial Crisis. There were only a few banks that had this problem — Silicon Valley Bank, First Republic Bank, and Signature Bank. Other banks didn’t have a problem,” he said. The problem of exposure to interest rates was well known to everyone. “I don’t think we want a system in which no bank will ever fail.”
Dimon was speaking to the newspaper after JPMorgan’s decision to add India to the emerging market government bond index. “It is very good for India to be part of the index because it has other ramifications and implications on transparency and the growth of the country. Hence, it will help inflow of stocks into India.”
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