Dimon warns of 'turmoil' in Treasury market that could force Fed to intervene
JPMorgan's CEO noted that strict banking regulations could cause a freeze in the Treasury market, reminiscent of the turmoil of 2020 that was followed by a surge in BTC prices.
Francisco Rodriguez | Edited by Cheyenne Ligon on April 13, 2025, 2:35 PM
What you need to know:
- JPMorgan CEO Jamie Dimon predicts “turmoil” in the Treasury market that could require Fed intervention.
- He pointed to banking regulation as a factor limiting market liquidity and intermediaries.
- Dimon advocates reforms that would allow banks to more freely act as intermediaries in the Treasury market, reducing the need for the Fed to intervene.
- Such intervention has contributed to a significant rise in BTC prices in 2020, although other factors have also played a role.
JPMorgan Chase CEO Jamie Dimon is bracing for potential disruptions in the roughly $30 trillion U.S. Treasury bond market, which he says could lead to the Federal Reserve stepping in as it did at the start of the COVID-19 pandemic.
“There's going to be a lot of chaos in the Treasury markets because of all these rules and regulations,” Dimon said on an earnings call Friday, warning that the Fed won't act until “they start to panic a little bit.”
Dimon's comments come as bond yields have risen sharply and volatility in the market has increased. The rise in yields suggests investors are moving away from popular trades that exploit gaps between Treasury bond prices and futures, adding to the strain on an already rattled market that is under pressure from trade tensions as the U.S.-China trade war escalates.
Dimon noted that current rules prevent banks from acting as buyers when liquidity is low. In 2020, a similar situation forced the Fed to launch a multi-trillion-dollar bond-buying program to keep the market functioning.
He argues for reforms that would allow banks to act more freely as intermediaries. One measure under discussion is exempting Treasuries from leverage ratio calculations, which could allow institutions to increase their purchases of government debt without eroding their capital buffers.
“If they don't [change the rules], the Fed will be forced to mediate, which I think is just a bad idea from a policy perspective,” Dimon added.
The Treasury market plays a key role in the global financial system, influencing everything from mortgage rates to corporate bond yields. Dimon warned that if the system were to lock down again, the impact could ripple across the economy.
A disruption in the Treasury market that leads to Fed intervention could push some investors toward Bitcoin (BTC), which is often seen as a hedge against monetary instability. This appears to have happened in 2020, when Bitcoin’s price surged following the Fed’s aggressive stimulus response. Other factors, such as the impact of the cryptocurrency’s 2020 halving, may have also contributed to Bitcoin’s price rise.
