Jamie Dimon, CEO of JPMorgan Chase, said low-yielding treasuries are a bad investment right now.
“I wouldn’t be a buyer of Treasurys,” Dimon said Tuesday at an annual Goldman Sachs financial services conference. “I don’t think Treasurys at these rates I would touch with a ten-foot rod.”
The 10-year Treasury yield was just 0.9% most recently and has remained below 1% since that threshold fell below that threshold during the collapse of the equity pandemic in March. Since bond prices must move inversely with yields, people like Dimon see little scope for treasuries to rebound with interest rates that are already at such low levels.
Of course, as the head of a $ 3.2 trillion credit institution, JPMorgan has to continually buy treasuries and other low-yielding assets to get a spread, which Dimon recognized. Low returns in the fixed income world are one reason banks’ profitability and stock values have come under pressure since the pandemic began.
Dimon’s comments were in response to a question from Goldman Sachs analyst Richard Ramsden whether the markets were fairly valued.
JPMorgan’s longtime CEO and chairman responded that if the investor base event occurs – a next year rebound triggered by coronavirus vaccines – it means today’s “bond spreads and most stock prices would be warranted”.
“”There can be a bubble in small parts of the stock market, not all, “Dimon said.
However, if inflation picks up due to the government’s fiscal stimulus programs providing money to households and businesses, the bonds bought today could become a money loser.
Separately, Dimon said JPMorgan’s spending will be higher than $ 67 billion over the next year, up from many analysts’ estimate of $ 66 billion as the bank “finds things we want to invest in” .
He added that fourth quarter revenue in both trading and investment banking businesses is 20% higher than a year earlier.