JPMorgan Chase CEO Jamie Dimon warned Tuesday that a volatile mix of soaring government debt, geopolitical turmoil, andspiking oil pricescould trigger a global bond crisis.

Speaking at aninvestment conference hosted by Norway’s sovereign wealth fund, the head of the nation’s largest bank said investors are ignoring these overlapping threats at their own peril.

“The level of things that are adding to the risk column are high, like geopolitics, oil, government deficits,” Dimon said. “They may go away, but they may not, and we don’t know what confluence of events causes the problem.”

Dimon cautioned that if governments do not proactively address their balance sheets, the market will eventually force their hand.

“The way it’s going now, there will be some kind of bond crisis, and then we’ll have to deal with it,” Dimon said. “I’m not that worried we’ll be able to deal with it. I just think maturity should say you should deal with it, as opposed to let it happen.”

The warning arrives as the US national debt nears $39 trillion, forcing the Treasury to issue a record flood of new bonds to fund daily operations and refinance maturing debt.

A bond crisis typically erupts when investors lose faith in a government’s ability to manage its books.

If buyers balk at the relentless auctions of new debt, borrowing costs soar and market liquidity evaporates, forcing central banks to step in as buyers of last resort.

Global markets saw a preview of this instability during Britain’s 2022 “gilt crisis,” when a proposed unfunded tax-cut plan triggered a bond rout that required emergency intervention by the Bank of England to save domestic pension funds.

Dimon noted that the current global backdrop is uniquely fragile. Conflicts in the Middle East and Ukraine have raised fears of sustained oil supply shocks. Higher energy prices pushcore inflation higher, which forces theFederal Reserve to keep interest rates elevated. Those high rates weigh heavily on mortgages, corporate loans, and the government’s own interest payments.

Source: Drudge Report