Fed May Be Forced to Act Amid Treasury Market ‘Kerfuffle,’ Warns Dimon

Dimon Warns of Treasury Market Chaos, Fed Response Could Spark Bitcoin Surge

Jamie Dimon, the CEO of JPMorgan Chase, has raised alarms about potential disruptions in the $30 trillion U.S. Treasury market, a scenario he believes could force the Federal Reserve to step in, echoing the Fed’s actions during the 2020 pandemic crisis.

In a Friday earnings call, Dimon warned that stringent banking regulations could trigger a “kerfuffle” in the Treasury markets, adding that the Fed likely wouldn’t intervene until the situation escalates and investors begin to panic. His comments come amid rising bond yields and growing market volatility, which have compounded concerns over U.S.-China trade tensions.

Dimon explained that current regulations prevent banks from buying Treasuries to provide liquidity during market stress, unlike in 2020, when the Fed had to initiate a multi-trillion-dollar bond-buying program to stabilize the market. He advocates for reforms that would allow banks to act as intermediaries more freely, including exempting Treasuries from leverage ratio requirements, which could help banks purchase more government debt without impacting capital reserves.

“The rules need to change; otherwise, the Fed will have to intervene again, which I think is a bad idea,” Dimon said, emphasizing the risks of further intervention in the Treasury market.

A disruption in the Treasury market could have widespread consequences, affecting everything from mortgage rates to corporate borrowing costs. Dimon also suggested that, in the event of a Fed intervention, investors may once again flock to bitcoin (BTC) as a safe haven asset, similar to what occurred in 2020 when bitcoin saw a significant price surge following the Fed’s aggressive stimulus response.

With increasing uncertainty in traditional markets, bitcoin’s role as a hedge against economic instability could become more pronounced, leading to renewed investor interest in the cryptocurrency.