Total margin debt across Wall Street hit $822bn by the end of March — after Archegos had failed.
That was almost double the $479bn level of this time last year and far more than the around $400bn peak that margin debt reached in 2007, just before the financial crisis.
Matt King at Citi, for example, recently told clients that one reason why bond yields have stayed low — and equity markets soared — is that the Fed has been quietly releasing funds into the market, via banks, from the so-called US Treasury General Account.
After all, the Archegos episode was a repeat lesson in how nobody usually worries about excess leverage while asset prices are rising. It is only when they suddenly tumble, for idiosyncratic or system-wide reasons, that nasty surprises emerge.
Gillian Tett FT 29 April 2021