In the first half of 2026, the surface volatility of global financial markets was limited, but the use of leverage rose significantly. Goldman Sachs and a number of institutions have recently noted that the finance chain is continuously being lengthened from the acquisition of leverage ETFs by the bulk, to the expansion of opens through futures and total proceeds swaps by the institution, to the balance sheets of traders.
According to Robert Quinn, an expert in the Goldman Sachs futures trade, stock financing costs have rarely increased this week. The monthly rate of the 500 TRF financing rate rose to 127.5 basis points above the Federal Fund rate. The CME 500 index adjustment of interest rate total futures, which measures the cost of US equity financing, has also risen to a high level since the end of 2024.
Leverage ETF Push Up Open
A major driver of this round of expansion comes from the diaspora. The current leverage and reverse ETF asset management scale is close to $200 billion, corresponding to a net exposure of approximately $40 billion, and the related product has significantly expanded.
According to Goldman Sachs, the continued inflow of funds, ETF, is squeezing the ability of traders to open up to popular stocks. The demand is concentrated on semiconductor taps such as SK Hercules, Samsung and Stations. Dealers usually take on such demand through total revenue swaps, while the related stock increases in turn push up ETF size and further enhance overall leverage.
Parallel rise in institutional financing requirements
Institutional leverage demand is equally strong. The Goldman Sachs Futures Trading Office mentioned that the demand for financing on the IT block was significantly higher than small capitalization, which raised the implied financing interest rate differential between the Standard 500 and Russell 2000 index futures up to a high of years, indicating that the need for leverage between different assets was being divided.
Andy Kent, a broker in Kyte, argued that the bond debt remained high, that the shadow banking system was continuing to expand and that leverage had become an important variable in the current market. He also mentioned that leverage ETF growth, futures accumulation, the use of bank capital by IPO and ADR projects, and the expansion of the business of the main broker had combined to raise the cost of financing in the United States market.
Asian finance is a big pusher.
Goldman Sachs also attributed part of the recent increase in financing costs to Asian demand, particularly the Korean market. In its report, the Bank stated that the movement of the Korea composite equity index had led to a self-enhancement cycle, backed by the continued accumulation of leveraged funds.
The report mentions that the Korean regulatory authorities have tried to tighten controls relating to the exchange of total proceeds, but with limited effect. By leveraging ETFs to build demand, institutions to expand their positions through TRS, the overlap between which has further reduced the financing space for traders.
The market started to turn to the hedge.
Against the backdrop of rising financing costs and the high valuation of the Science and Technology Unit, some investors have begun to increase. The Bank of the United States indicated that there was a large flow of customers at both ends of the main macro-traffic subject. Some of the funds were previously charged “share down interest rate rise” stagnating transactions and then turned to “share down interest rate” recessionary hedges.
Morgan Chase strategist Bram Kaplan suggests that clients focus on the 500-point mark that is linked to up interest rates in order to take advantage of the trading opportunities offered by the fall in equity debt correlation. A number of banks are also continuing to roll out hybrid structural products to meet more complex risk management needs.
Goldman Sachs warned that the cost of financing could rise again as the end of the season approaches, taking into account this May. Of even greater concern is the fact that, when traders ' spreads in financing are high, and when individual counterparties are unable to withstand financing pressures, the leverage chain may contract quickly and have a ripple effect on risk assets.