Woofun AI reports that Mike Wilson, Chief Investment Officer and Chief U.S. Equity Strategist at Morgan Stanley, has identified liquidity tightening as the predominant risk to the U.S. stock market, superseding concerns over interest rate hikes. Wilson highlighted a significant contraction in market support mechanisms, noting that the scale of the reserve management plan has declined by approximately 75% from its peak, while Treasury repurchase volumes have also retreated by 50%.

This structural shift in liquidity conditions is expected to drive heightened volatility in the U.S. equity markets during July, potentially triggering a near-term pullback. Wilson assesses that the subsequent leg of the bull market, typically driven by corporate earnings, will be postponed until these liquidity constraints are alleviated.