BENZINGA
JPMorgan Chase CEO Jamie Dimon has said he would not buy long-dated government bonds, warning that elevated government debt and persistent fiscal deficits across major economies could eventually push interest rates higher and unsettle financial markets.
Speaking on an episode of The Master Investor Podcast with Wilfred Frost released Monday, Dimon was asked whether he would buy long-dated government bonds at current levels. "Personally, no," he replied, before adding, "I would not be a buyer."
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Deficits Will 'Become a Problem'
Dimon said debt-to-GDP ratios have climbed to around 100% in the U.S. and Europe, while government deficits remain historically elevated despite the absence of a major recession or war. He argued governments should address those imbalances before markets force action.
"My view is it will become a problem," Dimon said. "It's better we deal with it maturely… The other way is to wait for it to become a problem. My guess is that's what's going to happen."
His comments come days after publicly held U.S. federal debt surpassed 100% of gross domestic product for the first time since World War II, renewing debate over the country's fiscal outlook. Rising debt and interest costs have fueled concerns that an increasing share of government spending will go toward servicing debt rather than productive investment. While some analysts argue that could prove deflationary, others warn persistent deficits could drive inflation and borrowing costs higher. Dimon's warning aligns with the latter view, as he said unresolved fiscal imbalances could lead to higher interest rates, market volatility and renewed pressure from bond investors.
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The comments also build on concerns the JPMorgan chief has expressed throughout the year. In May, he warned policymakers to tackle rising government borrowing before markets reacted, saying unchecked deficits could eventually trigger "some kind of bond crisis." Following the bank's second-quarter earnings last week, Dimon described the U.S. economy as resilient while cautioning that persistent inflation, geopolitical tensions, elevated asset prices and large fiscal deficits remained key macroeconomic risks.
Inflation Still Clouds the Outlook
Dimon also said investors should avoid placing too much weight on individual inflation reports, arguing monthly data can be noisy. Even if inflation falls back to the Federal Reserve's 2% target, he said he sees little upside in owning long-dated government bonds because yields already reflect much of that scenario.
He added that as an "economic historian," he remains mindful of past periods when inflation accelerated despite improving economic conditions, making him cautious about assuming inflation risks have fully disappeared.
Image via Shutterstock
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