Jamie Dimon Suggests that the 10-Year Treasury Could be at 5%

I think Jamie Dimon is the smartest guy on Wall Street. He wasn’t only the brains behind Smith Barney when Sandy Wiell made his run, he also turned around Bank One and has engineered an extraordinary turn at Chase. Plus, he went to Tufts.

So, while there isn’t too much intelligence coming out of Wall Street, when Jamie Dimon speaks, people should listen. We listened to him about bitcoin and we’ll listen to him again now.

According to Bloomberg, Dimon was speaking at the Aspen Institute and said that 10-year Treasury should already be at 4% and could be at 5% in the near future.

While Dimon believes that a rise in the Treasury will not immediately derail the bull market (he suggested it could run a couple years longer), it is worth analyzing what a sharp steepening of the US Treasury would do to asset prices.

In particular, BestCashCow has already warned against bonds in our article entitled You Are About to Get Killed in Bonds. That article was written a year ago when 10-year Treasury rates were much lower. Given Dimon’s view, we are redoubling that advice now.

And, while we are excited that one-year CD rates are now offering a real premium over savings rates, should the yield curve steepen as Dimon predicts, you really do not want to go out further than one year.

We recommended some great savings and money market accounts in our recent savings rate update. Savings and money market accounts are as short as you can possible be on the yield curve. If the 10-year Treasury were to quickly move to 5%, you will be glad to be concentrated there.