As global bond markets come under renewed pressure, JPMorgan CEO Jamie Dimon warned on Tuesday, October 6, on the sidelines of an event in London that the global scramble for capital could begin squeezing corporate borrowers.

Dimon said investors will keep demanding higher returns, and that this pressure will eventually feed through to corporate bonds and credit spreads.

Dimon has repeatedly warned 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 Begin to Feel the Squeeze

Speaking on the sidelines of a JPMorgan event in London on October 6, Dimon said the global competition for capital could start squeezing corporate borrowers. He said investors will keep demanding higher returns, and at some point that pressure will be transmitted to corporate bonds and credit spreads.

Credit spreads refer to the extra portion by which a company's borrowing rate exceeds the government borrowing rate. 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 handled, but in a far more painful way.

Bond Market Stress Has Already Appeared: Treasuries, Junk Bonds, and Leveraged Loans All Under Strain

Dimon's comments come as global bond markets suffer a sell-off. 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 strain. 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 at less than 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 earlier and just $4 billion short 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 that the high-yield bond default rate will rise from an estimated 2.25% this year to 2.75% in 2027. 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 Major Drivers and What to Do

Dimon's explanation begins 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. 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 released by the U.S. Treasury in August showed that figure had surpassed $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 represents another layer of pressure. Dimon's April 6 shareholder letter called inflation "the skunk at the party." He worries that prices will continue rising rather than falling in 2026, and the Iran war has pushed up energy costs.

For companies, Dimon's test is simple. Whether or not they use leverage, any business that needs to refinance or borrow should ask itself whether it is prepared for higher credit spreads. This applies not only to companies with strained 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 job 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 current scale of exposure, that warning carries more weight. The private credit market alone is worth about $1.7 trillion, and that figure keeps growing.