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Banking giant JPMorgan is holding about half a billion dollars in cash, waiting to invest at higher rates in the coming months, rather than buying Treasury bonds or other securities, CEO Jamie Dimon said Monday at a virtual banking conference.
“We expect prices to stay low a little bit longer; the Fed told us that,” Dimon, long-time president of JPMorgan Chase & Co., JPM, said -1.70% Monday at the US financial services conference Morgan Stanley.
But “if you look at our balance sheet, we have close to $500 million in cash and we’ve already stored more and more money waiting [an] An opportunity to invest at higher rates, Dimon said, according to the conference transcript.
He said the plan is to enable the bank to “take advantage of higher interest rates in the short and long term and longer rates,” adding that it would depend “on the decision we make over the next six to nine months.”
“But I expect you’ll see higher rates and more inflation today.”
The yield on the TMUBMUSD10Y 10-year Treasury rose 1.500% by about 3.7 basis points on Monday to 1.499%, far from the 1.749% high for the year hit in March, but still up about 60 basis points over the year, according to Dow market data. Jones.
The Fed’s two-day rate-setting meets this week, starting on Tuesday, with investors waiting for Wednesday’s policy update to see how the central bank grapples with evidence of rising inflation in recent months, but also slack in the labor market during the COVID recovery from the pandemic.
See: Inflation Fears? Check this chart before you get upset
Investors will also hear any hints of change regarding the Federal Reserve’s rate expectations and about future plans for monthly asset purchases, which are seen as a first step to tightening its easy monetary stance.
Read: Paul Tudor Jones sees ‘green light to bet hard on every inflation trade’ if Fed ignores price pressures on Wednesday
The US central bank currently buys about $80 billion in Treasurys and $40 billion in mortgage-backed securities each month, while maintaining benchmark interest rates between 0% and 0.25%.
But while inflation has been surprisingly hot, many economists and strategists expect the Fed to wait until the fall to see how the labor market responds to rising inflation.
Read: Don’t be fooled by some of the Fed’s hawkish voices this week
Stocks were mixed on Monday ahead of the Fed’s update, with the Nasdaq Composite Index, +0.74% near its record close, but with the S&P 500 SPX, +0.18% and the DJIA, -0.25% lower.
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