“There will be a kerfuffle in the Treasury markets because of all the rules and regulations,” Dimon said Friday on an earnings call. When that happens, the Fed will step in—but not until “they start to panic a little bit,” he added.

Yields, especially on longer-term debt, have jumped this week amid broader market turmoil tied to President Donald Trump’s evolving tariff policy. The moves have raised questions about the debt’s safe haven appeal and stoked fears that hedge funds and other investors may be unwinding a pair of popular leveraged trades — one on the price difference between cash Treasuries and futures, and another on the spread between Treasury yields and swap rates.

In March 2020 with Covid engulfing the world, the Treasury market seized up as investors rapidly unwound their positions. The Fed was forced to intervene, pledging to buy trillions of dollars of bonds and providing emergency funding to the repo markets. Dimon said bank rule changes are needed to avoid that happening again. 

“When you have a lot of volatile markets and very wide spreads and low liquidity in Treasuries, it affects all other capital markets,” Dimon said. “That’s the reason to do it, not as a favor to the banks.”

Read More: To Know When Fed Would Intervene, Look at LTCM, 9/11 and 2008

One of the speculated changes that regulators under Trump may pursue is exempting Treasuries from the U.S. banks’ supplementary leverage ratio, allowing firms to buy up more of the debt without a hit to their key capital ratios.

Dimon said the issue is not just with the SLR, and listed a slew of regulations with “deep flaws” that he said required reforms so banks could become more active intermediaries in markets.

“If they do, spreads will come in, there’ll be more active traders,” he said. “If they don’t, the Fed will have to intermediate, which I think is just a bad policy idea.”

The selloff in Treasuries intensified Friday as investors continued to retreat, with the yield on 10-year notes — a benchmark for the cost of everything from corporate bonds to mortgages — rising as much as 16 basis points to nearly 4.6%, before paring the jump. The 30-year rate climbed as much as 12 basis points to nearly 5% before also paring that move.

Dimon’s comments Friday build on ones he made this week in his annual shareholder letter. Certain rules treat Treasuries as “far riskier” than they are, he wrote, adding that restrictions on market-making by primary dealers, together with quantitative tightening, will likely lead to much higher volatility in Treasuries. 

“These rules effectively discourage banks from acting as intermediaries in the financial markets — and this would be particularly painful at precisely the wrong time: when markets get volatile,” Dimon wrote.