Jamie Dimon, CEO of JPMorgan Chase, says the Federal Reserve can be enforced, just like it did in the early days of the Covid-19 pandemic.
“There’s a kerfuffle in the Treasury market due to all the rules and regulations,” Dimon said in a revenue call Friday, warning that the Fed will not act until it starts to panic a little.”
Dimon’s comments come as bonds bring spikes and market volatility rises. The rise in yields is being pulled back from the general trade that leverages the gap between Treasury prices and futures, suggesting that it will stress markets already rattle by trade tensions amid the escalation of the US-China trade war.
Dimon said current regulations prevent banks from intervening as buyers when liquidity is dry. In 2020, a similar situation forced the Fed to launch a multi-trillion dollar bond buying program to keep the market functioning.
He calls for reforms that allow banks to act more freely as intermediaries. One idea under discussion is that the Ministry of Finance will be exempt from calculating leverage ratios. This will allow institutions to purchase more government debt without attacking the capital buffer.
“If they (don’t change rules), the Fed must be in the middle. I think this is just a bad policy idea,” says Dimon.
The financial market plays a central role in global finance, setting the tone for everything from mortgage rates to corporate debt yields. Dimon warned that if the system is locked again, the results could ripple over the entire economy.
The financial market disruption that leads to Fed intervention could drive some investors towards Bitcoin (BTC). This appears to have been the case in 2020, when Bitcoin prices skyrocketed following the Fed’s aggressive stimulus response. Other factors, including Cryptocurrency’s half-effect impact in 2020, could have also been factored into Bitcoin’s price rise.
