Global Leverage Hits 93rd Percentile as Goldman Sachs Urges Active Protection Buying Amid Risks

Goldman Sachs warns global leverage remains at 93rd percentile despite late-stage deleveraging. Systematic selling risk of $24.9B outweighs buying, prompting active hedging recommendations.

Woofun AI reports that Goldman Sachs’ trading team assesses the recent US equity market retracement and position unwinding as entering its late stage, though substantial derisking remains incomplete. Global total leverage currently sits at the 93rd percentile over the past five years, with geopolitical events, Federal Reserve policy, and earnings season poised to sustain high volatility.

The firm projects August US stock market upside will be constrained by seasonal fund outflows, weak institutional demand, and dealer Gamma suppression, likely resulting in a range-bound market. A one-week decline scenario could trigger $24.9 billion in systematic selling from CTA strategies, far exceeding the $2.3 billion in potential buying during upward moves. While corporate buybacks offer stable support—with 31% of S&P 500 stocks currently in open windows and expected to exceed 90% by mid-August—rising correlation with the index increases simultaneous decline risks. Goldman Sachs advises actively acquiring protective positions, including long market correlation bets, Russell 2000 ETF three-month puts, and short-term options on retail-favorite stocks, citing reasonable hedging costs.