JPMorgan CEO Jamie Dimon issues another bond market warning: corporate borrowers will begin to come under pressure.

Amid renewed pressure in global bond markets, JPMorgan CEO Jamie Dimon warned on the sidelines of a London event this Tuesday (October 6) that the global scramble for capital could begin to squeeze corporate borrowers. Dimon said investors will keep demanding higher returns, and that pressure will eventually feed through to corporate bonds and credit spreads. Dimon has warned repeatedly about bond market risks before: on April 28, he predicted at a Norwegian sovereign wealth fund conference that "some kind of bond crisis" would occur; as early as a 2025 interview, he also cautioned that bond market volatility would hurt borrowers, including small businesses, and admitted he could not tell whether trouble would arrive in six months or six years. This time, he identified the next group likely to come under pressure. **Dimon's latest warning: corporate borrowers will start to feel the squeeze** Speaking on the sidelines of a JPMorgan event in London on October 6, Dimon said the global scramble for capital could begin to squeeze corporate borrowers. He said investors will keep demanding higher returns, and at some point that pressure will feed through to corporate bonds and credit spreads. Credit spreads refer to the extra portion of the interest rate a company pays to borrow above what a government pays to borrow. When spreads widen, it becomes more expensive for companies to refinance old loans or take out new ones. Dimon's advice is to act early. "The best way to deal with these things is to deal with them before they become a crisis," he said. He added that if it does become a crisis, the problem will still be dealt with, but in a far more painful way. **Bond market stress is already showing: Treasuries, junk bonds, and leveraged loans all under strain** Dimon's comments come as global bond markets endure a selloff. The wave of selling began after the outbreak of the Iran war, which pushed up inflation. The benchmark 30-year U.S. Treasury yield recently climbed to its highest level since 2007. Strong U.S. economic performance and the AI boom's demand for capital have added further pressure. Riskier debt is already showing stress. According to LSEG data compiled by Yardeni Research, in the credit default swap (CDS) market, the cost of insuring against default on U.S. junk bonds has risen sharply. JPMorgan strategists have quantified the problem with data. Leveraged loans trading below 60 cents on the dollar total $65 billion, up from $40 billion a year earlier and the most since March 2020. The broader pool of distressed loans is even larger. Loans priced at or below 80 cents on the dollar total $139.8 billion, nearly 90% more than 12 months ago and just $4 billion shy of the May 2020 peak. The technology sector is the weak link. It accounts for 39% of total distressed loans, or $54.4 billion. A total of 141 issuers have loans trading below 80 cents, 35 more than a year earlier. The bank expects more companies to default. Its strategists forecast the high-yield bond default rate will rise to 2.75% in 2027 from an estimated 2.25% this year. The leveraged loan default rate is also expected to reach 4.50% in 2027. CCC-rated bonds the lowest tier of junk debt are yielding 15.58%, the highest since November 2022. **Why money is more expensive: three main drivers and how to respond** Dimon's explanation starts with supply and demand. In May, he said global savings had shifted from a surplus to a shortage. He warned that interest rates could be far higher than they were at the time. Back then, the 30-year U.S. Treasury yield had already reached its highest level since 2007. He pointed to three factors: high oil prices; concerns about government spending in Japan, the UK, and the U.S.; and AI-driven growth. And America's growing debt burden is amplifying that pressure further. When Dimon spoke in Norway on April 28, U.S. federal debt stood at $39 trillion; data published by the U.S. Treasury in August showed the figure had topped $40 trillion for the first time. He also cited the 2022 UK gilt crisis as an example: yields spiked within days, forcing the Bank of England to intervene. His point is that these things move fast. Inflation adds another layer of pressure. Dimon's April 6 shareholder letter called inflation "the skunk at the party." He worries that prices will keep rising rather than fall in 2026, and the Iran war has pushed up energy costs. For companies, Dimon's test is simple. Any business that needs to refinance or borrow leveraged or not should ask itself whether it is prepared for higher credit spreads. This applies not only to companies with stretched balance sheets, but also to those with healthy ones. So far, the damage remains relatively contained. After the Fed raised rates in September, Dimon said borrowing costs could continue to rise. But the relative strength of the jobs market suggests those costs have not yet translated into broader economic stress. He does not believe the calm will last forever. It has been a long time since the last credit crisis. Dimon said in April that when the next credit crisis arrives, "it will be worse than people think." Given the scale of current exposure, that warning carries more weight. The private credit market alone is worth about $1.7 trillion, and that number keeps growing.