JPMorgan Chase CEO Jamie Dimon said the bank tests its ability to keep serving clients through severe shocks, including a 40% stock-market decline and a two- to threefold expansion in bond credit spreads.
Dimon described those outcomes as stress scenarios for the bank to withstand, rather than predictions about market direction. A credit spread is the yield gap between a bond and safer debt.
The bank’s planning also considers interest rates moving either higher or lower, as well as inflation and stagflation. Dimon said a downturn’s timing depends on a mix of developments that cannot be identified in advance.
He cited wars abroad, large government deficits and inflation that has persisted over the past five years as risks. Dimon also noted that corporate profits were rising and unemployment was low, while businesses and consumers had relatively low leverage.
The remarks add detail to risks Dimon raised after JPMorgan’s third-quarter results, including deficits, inflation and geopolitical conditions, as EconoTimes previously reported.
