Goldman Sachs: The fastest growth in the first half of the year was global "leverage"

Glonghui July 1st｜Goldman Sachs warns that the global leverage chain has extended to every corner — retail investors have poured nearly $200 billion into leveraged ETFs, institutions are piling up positions via TRS, and dealers' leverage has reached a historical mid-year peak. The S&P 500 financing rate once soared to the federal funds rate +127.5 basis points. The Korean market has further evolved into a “massive self-reinforcing feedback loop.” If a link in the financing chain breaks, a domino collapse could happen overnight.
Goldman Sachs futures trading expert Robert Quinn pointed out in the latest weekly report that this week saw an “unprecedented” surge in stock financing costs, with dealers' leverage reaching a historical mid-year high. In September, the S&P 500 TRF financing rate once hit federal funds rate +127.5 basis points. The CME S&P 500 Index Adjusted Rate Total Return Futures (AIT TRF), which measures US stock financing costs, has climbed to the highest level since the end of 2024. Andy Kent from brokerage Kyte said, “Leverage has become one of the central themes faced by investors, margin debt is high, and borrowing across all segments of the shadow banking system continues to expand.”