TechFlow news, according to TechFlow Research, JPMorgan's July 15 capital flow report pointed out that the deleveraging process launched in June is still ongoing, leveraged ETFs, options, and margin accounts still have room for compression, and the US stock market still faces pressure in the short term. Since the peak in June, the size of outstanding leveraged ETFs has shrunk by 34%, and leveraged ETFs across the entire market have shrunk by 13%. There is "convexity decay" in the structure of leveraged products: continuously consuming their own size during range-bound oscillations, and it will take about three months of oscillation to return to pre-April levels.
Retail call option buying volume has fallen from the peak on June 5, but remains distant from historical bottoms; margin account leverage remains at levels comparable to the peaks at the end of 2021 and mid-2018. Hedge fund leverage ratios have fallen from historical highs in June, and semiconductor positions are beginning to be cut. Risk parity fund leverage has returned to normal. In the medium to long term, long-term capital such as retail investors, CTAs, and sovereign wealth funds still provide net demand support, with net equity demand for the year at approximately $275 billion. JPMorgan believes that short-term volatility may be the end of deleveraging, rather than a signal of deteriorating fundamentals.
