Jamie Dimon Says He Wouldn’t Touch Treasuries With A 10-foot Pole At These Rates (Can’t Turn Treasuries Loose!)

by confoundedinterest17

Like Otis Redding sang, JP Morgan Chase can’t turn Treasuries loose … since JPMC is a primary dealer for the NY Fed and must submit bids to purchase Treasuries. Here is the piece from CNBC.

I can see Jamie Dimon’s point about low Treasury yields. At the 10-year tenor, the yield is less than 1%. And Japan’s 10-year yield is barely above 0%.

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“Of course, as the head of a lending institution with $3.2 trillion in assets, JPMorgan has to continually purchase Treasuries and other low-yielding investments to earn a spread, a fact that Dimon acknowledged. Low yields in the fixed income world are one reason that banks’ profitability and stock values have been under pressure since the pandemic began.”

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But as a primary dealer, JPMC must bid on Treasuries. So it is more than just to earn a spread. JPMC is required as a primary dealer to bid and purchase Treasuries, even at sub-1% yields. Even if it is with a 10-foot pole.

I couldn’t find a photo of a ten-foot pole, but here is a photo of Cezary Trybański, a 7’2 Pole.