JPMorgan: U.S. Stock Deleveraging 34% Complete Since June, May Need 3 More Months of Volatility

According to JPMorgan Chase's July 15 capital flow report, the deleveraging process initiated in June is still ongoing, with leveraged storage ETFs shrinking 34% from peak levels and broad leveraged ETFs declining 13%. The bank estimates U.S. stocks may face continued pressure for approximately three months as leveraged products experience structural losses through range-bound oscillation.

Margin account leverage remains elevated at levels comparable to late 2021 and mid-2018 peaks, though hedge fund leverage has begun declining from June highs. JPMorgan noted that near-term volatility likely signals the final phase of deleveraging rather than fundamental deterioration, with long-term investors providing supportive net demand of approximately $275 billion for equities this year.