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The Tell: Dimon: JPMorgan is sitting on about $500 million in cash, waiting to invest in higher rates

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Banking giant JPMorgan has been sitting on about a half-billion-dollar stockpile of cash, waiting to invest in higher rates in the coming months, instead of buying Treasurys or other securities, Chief Executive Jamie Dimon said Monday at a virtual banking conference.

“We do expect rates to stay low for a bit longer; the Fed has told us that,” Dimon, the longtime boss of JPMorgan Chase & Co.,
JPM,
-1.70%

said Monday at the Morgan Stanley U.S. Financial Services Conference.

But “if you look at our balance sheet, we have like $500 million in cash and we’ve actually been stockpiling more and more cash waiting for [an] opportunity to invest in higher rates,” Dimon said, according to a transcript of the conference.

The plan aims to position the bank to “benefit from rising rates both from the short end and the long run and long rates,” he said, adding that it will hinge “on the decision we make over the next six to nine months.”

“But I do expect you are going to see higher rates and more inflation today.”

The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.500%

rose about 3.7 basis points on Monday to 1.499%, well off the 1.749% high for the year hit in March, but still up about 60 basis points on the year, according to Dow Jones Market Data.

The Federal Reserve’s rate-setting gathers for two days this week, starting Tuesday, with investors awaiting a policy update Wednesday to see how the central bank is grappling with evidence of surging inflation in recent months, but also slack in the job market during the COVID pandemic recovery.

Check out: Inflation scare? Check out this chart before freaking out

Investors also will be listening to any hints of change in terms of the Fed’s outlook for rates and around future plans for its monthly asset purchases, viewed as a first step to tightening its easy-monetary stance.

Read: Paul Tudor Jones sees ‘green light to bet heavily on every inflation trade’ if Fed ignores price pressures Wednesday

The U.S. central bank at present buys about $80 billion of Treasurys and $40 billion of mortgage-backed securities each month, while keeping benchmark interest rates between 0% and 0.25%.

But while inflation has been surprisingly hot, many economists and strategists expect the Fed to wait until the fall to see how the labor market responds to the inflation spike.

Read: Don’t be fooled by some of the hawkish sounds coming out of the Fed this week

Stocks were mixed Monday ahead of the Fed update, with the Nasdaq Composite Index
COMP,
+0.74%

near its record close, but with the S&P 500 index
SPX,
+0.18%

and Dow Jones Industrial Average
DJIA,
-0.25%

trading lower.

Key Words: Paul Tudor Jones sees ‘green light to bet heavily on every inflation trade’ if Fed ignores price pressures Wednesday

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