JPMorgan's Jamie Dimon made bearish call on treasury bond market. Many investors already acted on it - CNBC

What the report says

CNBC reported that JPMorgan Chase CEO Jamie Dimon cautioned this week against buying long-term U.S. Treasury bonds, even as he also warned that investors may be too complacent about risks in the equity market. In an interview with CNBC contributor Wilfred Frost on Monday, Dimon said he would avoid long-dated Treasurys and suggested the 10-year yield should be around 4% to 4.5%. CNBC noted the 10-year Treasury yield was about 4.6% at the time of the report.

The article said many investors had already positioned in line with Dimon’s bond-market view by favoring short-term Treasury exposure. Citing ETFAction.com data, CNBC reported that the iShares 0-3 Month Treasury Bond ETF, ticker SGOV, had drawn $47.5 billion in net inflows this year, more than any other bond ETF. The fund was described as nearing $100 billion in assets, making it the third-largest bond ETF behind Vanguard Total Bond Market ETF and iShares Core U.S. Aggregate Bond ETF.

CNBC also reported that equity ETFs have continued to attract heavy demand, with the U.S. ETF market surpassing $1 trillion in assets at midyear and equity funds taking in nearly half of that total. At the same time, the short-term Treasury trend has persisted, with SGOV ranking fifth among all ETFs for flows in June and also placing among the top 10 ETFs over the past year.

The development matters because Treasurys are often used as a defensive allocation when investors worry about stocks. CNBC’s report highlights that some investors are seeking that defensive role at the short end of the yield curve, amid uncertainty over inflation, Federal Reserve policy, deficits and the pressure higher yields can place on long-term bond prices.