I think this chart carries a strong warning message — In September, margin debt in the U.S. stock market surged by 6.3%, reaching a record $1.13 trillion. Since April, investor leverage has skyrocketed by 39%, marking the largest 5-month spike since the market frenzy at the end of 2021. ​ An increase in margin debt generally means that the proportion of leverage used by investors is rising. This typically happens in two phases: 1. When the market anticipates easing is on the horizon, investors start leveraging up in advance; 2. When liquidity is actually released, there’s too much money, and risk premiums drop. What’s worth noting is that every peak in margin debt almost always corresponds to a market “sentiment top” — 2000, 2008, 2021, without exception. After the rate cut in September, stock market margin debt soared to $1.13 trillion, indicating that the market has collectively jumped on board. In other words, liquidity has already found its way into the capital markets. This kind of leverage is often not a rational inflow but rather a lagging buy-in driven by FOMO. If there’s any market turbulence — such as U.S. Treasury yield fluctuations, a dollar rebound, or escalating political events — it could very likely trigger a wave of deleveraging and a stampede. So, this is a dangerous time for leverage. Keep your hands off!