Despite the U.S. capital markets rattled with a 1,300-point loss the last two trading sessions, J.P. Morgan Chase CEO Jamie Dimon reaffirmed the strength of the economy, citing a robust labor market among a host of other factors.
“The economy is still very strong, and that’s across wages, job creation, capital expenditure, consumer credit; it’s pretty broad-based and it’s not going to be diminished immediately,” said Dimon said in a media conference call after J.P. Morgan’s earnings report. “I was pointing out the probabilities that I thought were higher that rates would go up. I still believe that. I do think you’re going to see higher rates.”
Dimon’s comments regarding interest rates come in conjunction with rising Treasury yields, which have caused investor worry as of late. The benchmark 10-year Treasury note and 30-year note resumed their upward trajectory today–the 10-year yield went to 3.163, while the 30-year rose to 3.336.
Related: Dimon’s 5% Yield Warning ‘Perfectly Reasonable’
Dimon’s bank reported that its third-quarter profit rose by 24% compared to a year ago, helped by the U.S. President Donald Trump administration’s tax cuts. In addition, net income was $2.34 a share, which beat estimates of $2.26 per share.
Since the installment of U.S. President Donald Trump’s administration, the country’s gross domestic product has grown by an average of 2.7% per quarter. Dimon’s comments come as the Federal Reserve raised the federal funds rate by 25 basis points in September, completing its third rate hike this year with the general consensus expecting that a fourth rate hike will occur before year’s end.
However, JPMorgan CEO Jamie Dimon was tepid when it came to the future of the banking business as Trump’s $1.5 trillion of tax cuts are expected to scale back in 2019. Dimon also mentioned that in addition to rising interest rates, trade wars could be a concern, but the economy has largely been able to shrug off its effects thus far.
“If rates go up because you have inflation, that is not a plus. That is a bad thing,” Dimon said. “So far, we still have a strong economy in spite of these increasing overseas geopolitical issues bursting all over the place.”
However, a prolonged dose of rising rates and trade wars would have negative implications on the economy moving forward.
For more trends in fixed income, visit the Fixed Income Channel.