JPMorgan Chase (JPM) CEO Jamie Dimon had a clear and concise message for the audience at his bank's annual investor meeting.
Interest rates will continue to rise, so prepare yourself.
DON'T MISS: JPMorgan CEO Dimon Says Banking Crisis to Be Felt 'for Years to Come'
"The easiest way for a bank to retain capital is to not make the next loan," Dimon said. "And I think everyone should be prepared for rates going higher from here."
Dimon says he has been advising clients that they should be prepared for 6% or 7% interest rates on the 10-year bond. He notes that the Federal Reserve does not control the 5- and 10-year interest rates on bonds.
The central bank only controls the overnight interest rates and, according to Dimon, there is still "too much liquidity" in the system -- as evidenced by high stock prices and large bond spreads.
Currently, the U.S. long-term interest rate (government bonds maturing in 10 years) was at 3.43% in April. But Dimon says investors should expect that rate to possibly double as the government looks to dry up liquidity in order to fight rampant inflation.
Dimon has had a rather gloomy long-term outlook on the banking sector for months.
In April, he warned that the U.S. banking crisis "is not yet over" and that the ripple effects from the collapse of banks like Silicon Valley and Credit Suisse bank will be felt "for years to come."
"The failures of SVB and Credit Suisse have significantly changed the market's expectations, bond prices have recovered dramatically, the stock market is down and the market's odds of a recession have increased," Dimon wrote in his annual letter to JPMorgan shareholders.
