“There will be a point where the market will ask for more and more and more,” Dimon told Mackenzie on the podcast, adding that “at one point that’ll feed into corporate debt, corporate credit spreads.” The credit spread he mentions is the extra interest a “riskier” borrower must pay for a lender to choose them over lending to the U.S. government.
Lenders usually prefer lending to the U.S. Treasury because it’s safer and offers a more reliable yield than individual companies, which can go bankrupt or default on payments.
The warning signs already showing in credit markets
In the first week of October, JPMorgan strategists reported a 62.5% increase in deeply distressed loans, up from $40 billion in 2025 to $65 billion in the third quarter of 2026, according to Bloomberg, the highest levels seen since March 2020.
This rise in deeply distressed loans means more companies are struggling to repay their existing debt and may be unable to do so in full. It does not mean every one of these companies has defaulted or will default, but it signals that lenders expect heavier losses than a year ago.
Dimon flagged this trend earlier in April, warning that inflation, driven by large deficits and heavy spending, would put more pressure on interest rates, calling inflation “the skunk at the party.” The latest credit data suggests that pressure is increasingly being applied where he said it would.
What a corporate credit squeeze means for your money
While Dimon was addressing corporate entities in his Bloomberg interview, the effects still ripple down to ordinary households. When companies face higher borrowing costs, they may cut jobs, reduce hiring and slow down industrial expansion to protect profits and avoid extreme situations like bankruptcy.
Rising Treasury yields, driven by the government’s deficits and its need to attract lenders, push rates higher across key consumer sectors. This happens because those lenders weigh the opportunity cost of lending money to a regular consumer against the safer government option. To access these loan facilities, everyday Americans will need to pay a higher interest rate than the U.S. government offers.
Mortgage rates, for instance, have remained elevated in 2026, with the 30-year fixed-rate mortgage averaging 7.40% as of October 8, 2026, and the 15-year fixed-rate mortgage averaging 6.73% within the same timeframe, according to Freddie Mac.
