Jamie Dimon warns of 5% Treasury yields but sees stock run lasting a few more years

Never mind bracing for 4% Treasury yields, Jamie Dimon now says. Square up for 5%.

The JPMorgan Chase & Co. CEO said Saturday that economic and market conditions already support a benchmark 10-year-note yield TMUBMUSD10Y, -0.75% at 4%, regardless of what the bond market is saying.

To Dimon that means:

‘You better be prepared to deal with rates 5% or higher — it’s a higher probability than most people think.’

The 10-year yield is actually back below 3% after piercing this threshold for the first time in four years earlier this year. In fact, the yield curve, a measure of market interest-rate expectations, reflects a slightly different view of the economy just now than even a few short weeks ago.

Short-dated 2-year yields, which are sensitive to Federal Reserve decision making and the latest data, including the spotty July jobs report, on Friday notched their largest weekly drop since the week ended May 25. At the long end of the curve, the 30-year yield TMUBMUSD30Y, -0.74% had advanced for three straight weeks through Friday, putting the immediate risk of a recession-signaling curve inversion, where long-term yields are below short term, on ice for now.

Even with the threat of higher borrowing costs crimping business growth, Dimon, who was speaking at an Aspen Institute gala, according to Bloomberg, remains upbeat on the stock market’s medium-term prospects.

The current bull market could “actually go for two or three more years” because the economy is still doing quite well and markets usually turn right before the economy, he said.

He suggested governments may move to shut down the currencies, because of an inability to control them.

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