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Financing and debt rise to $1.53 trillion, with US investors using leverage to chase higher prices

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ME News message, July 28 (UTC+8). Crypto KOL Phyrex posted on X, saying that U.S. investors are chasing the stock market’s highs with increasingly high leverage. As of June, brokerage accounts’ net credit balances fell by about $70 billion month-over-month, dropping to negative $1.061 trillion, the lowest level in history. In the same period, margin financing and securities lending (securities/short selling) debt increased by about $86 billion to $1.53 trillion, rising for the third consecutive month and setting a record. He noted that the ongoing deterioration in net credit balances means investors’ cash buffers are shrinking and stock positions are becoming more dependent on borrowing. Currently, leverage is widely present across the entire U.S. brokerage system. In a rising phase, as stock prices lift account net assets, investors can further release borrowed credit, creating mechanical buy orders; but once the market weakens, margin pressure may force investors to add cash or sell stocks, turning the leverage funds that previously pushed prices up into mechanical sell orders. He believes U.S. stocks are currently facing both high valuations and a high-funding/leverage environment, and if inflows of new capital slow, leveraged positions could further amplify market volatility. (Source: ODAILY)
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