Liquidity stress is creeping in through the back door, while Wall Street keeps pretending the party’s still going. On July 26, reverse repo usage exploded by nearly $200 billion in a day. “That’s a fire alarm,” one fund manager told RG Wealth. “You don’t get that kind of spike unless someone’s refusing to lend.”
https://rgwealth.com/market-thoughts/market-update-july-2025/
T-bill auctions are suddenly drawing heavy demand. “We’re watching capital flee into 1-month paper,” Invesco wrote in its July liquidity snapshot. Short-term safety is winning over longer-term bets. That does not scream confidence.
https://www.invesco.com/us/en/insights/global-liquidity-snapshot.html
S&P leveraged futures contracts collapsed from 180 to just 74.5 by mid-July. Morgan Stanley noted, “Appetite for leverage has dropped sharply. It’s not a rotation. It’s retreat.”
https://www.morganstanley.com/im/en-us/individual-investor/insights/slimmons-take/equity-market-commentary-july-2025.html
The Global Liquidity Report says new investable cash remains near zero. “Markets are now fighting for scraps,” the report states bluntly. Retail is backing out. Meme names are getting loud again, but volume is missing. Institutions are stepping away from growth. The rotation is quiet but deliberate.
The illusion of market strength depends on shrinking cash pools. Liquidity made this rally possible. Its disappearance will not be loud until the bids vanish.
https://blog.carnegieinvest.com/monthly-market-commentary-july-2025
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