The Wmax macro research team combines the latest PCE inflation data in May, statements by Federal Reserve officials, U.S. stock leveraged fund monitoring and global market risk signals, relying oninflation tracking system、Market Leverage Risk Monitoring Model与Cross-market risk transmission analysis frameworkComprehensive analysis and judgment: The current stickiness of U.S. inflation is far higher than market expectations, the energy decline has not reversed the trend of inflation spread, and the demand for AI infrastructure is becoming a new upward support for prices; at the same time, the scale of leveraged funds in the U.S. stock market has reached a record high, leveraged ETFs and options trading have expanded simultaneously, and market vulnerability has increased significantly. The leverage turmoil in the Korean market has sounded the alarm for U.S. stocks. Wmax will penetrate the data surface for investors and dismantle the two core risks and market impacts.

Inflation stickiness exceeds expectations: Energy decline is difficult to change the spreading trend, and AI demand becomes a new support

The latest data from the U.S. Department of Commerce showed that the PCE price index rose by 4.1% year-on-year in May 2026, the largest increase since April 2023, once again confirming that inflationary pressure is far from subsided. Richmond Fed President Barkin made it clear at the Aspen Ideas Festival that "these numbers are too high," emphasizing that current inflation is still clearly deviating from the 2% target, which is fully consistent with the ongoing monitoring conclusions of the Wmax inflation tracking system. Wmax dismantled the core characteristics of current inflation and found that the easing of energy shocks did not bring about a substantial decline in inflation, but instead presented more complex structural pressures:

1. Inflation has spread from energy to all sectors: Although the US-Iran ceasefire has driven down oil prices and gasoline prices have dropped significantly, price increases are no longer limited to the energy sector, but have spread to a wider range of service industries and core commodities. The continued stickiness of service industry prices is particularly alarming. Such prices are usually more difficult to fall and will significantly delay the downward process of overall inflation.
2. AI infrastructure becomes a new driving force for inflation: Artificial intelligence-related infrastructure construction is increasing demand on a large scale, forming a clear upward support for prices. This is the core difference between this round of inflation and previous cycles - the technology investment boom is affecting price trends in both directions from the supply side and the demand side.
3. Corporate pricing and salary expectations strengthen inflation persistence: Enterprises will take the current inflation level into consideration when setting prices, forming a self-reinforcing cycle of “inflation → pricing → inflation”. Although the recent fall in oil prices has eased some of the pressure to raise wages, companies have not clearly lowered their salary adjustment expectations for next year, and the risk of a wage-price spiral has not been completely eliminated.

Wmax judges that the current persistence of inflation may be stronger than market expectations, and restrictive policies still need to be maintained. Inflation has been above the 2% target for more than five years, and once consumer inflation expectations are pushed higher, it will be significantly more difficult to restore price stability. It is difficult for the Federal Reserve to turn to easing in the short term. The window for raising interest rates during the year has not been closed. In the future, inflation and employment data will still need to be closely monitored for several months.

2. Hidden concerns about leverage risks in U.S. stocks: 1.4 trillion margin debt hits a record high, leveraged trading expands

Accumulating simultaneously with inflationary pressure is the leverage risk in the U.S. stock market. Wmax market leverage monitoring data shows that the scale of U.S. margin debt surged 54% year-on-year in May 2026, reaching a historical high of US$1.4 trillion. Investors' willingness to borrow money to buy stocks has increased significantly, and the market's reliance on leverage is rising rapidly. What deserves more vigilance is the multi-layered nesting risk of leveraged products: the asset size of double and triple leverage ETFs has almost doubled in just over two months, rising to US$220 billion, with participants including both hedge funds and a large number of retail investors. Some investors even buy leveraged ETF options on margin, forming a complex structure of "three to four levels of leverage", and the risks are amplified layer by layer.

Wmax dismantled the procyclical transmission mechanism of leveraged funds and found that this trading model is significantly amplifying the two-way fluctuations of the market:

• Positive feedback during the rising phase: In order to match capital inflows, leveraged funds need to continuously buy derivatives, and market makers buy related stocks to hedge risks, further pushing up prices, forming a positive cycle of "fund inflow → leverage amplification → stock price rise → more capital inflows". Among the extreme gains in the semiconductor and AI sectors this year, the driving role of leveraged funds cannot be ignored.
• Negative feedback during the decline phase: Once the market turns downward, the chain will operate in the opposite direction - leveraged fund assets shrink and are forced to passively reduce risk exposure, further intensifying selling pressure. In extreme cases, the "tail wagging the dog" phenomenon may even occur, with derivatives and leveraged funds in turn dominating the underlying asset prices, triggering irrational plummets.

The turmoil in the Korean market has provided a lesson: leveraged trading in the Korean stock market is active, and related leveraged fund transactions once accounted for half of the average daily trading volume of stocks such as Samsung and SK Hynix. Recently, the stock market has experienced violent fluctuations and triggered a circuit breaker. The procyclical effect of leveraged funds has significantly amplified the decline. The current leverage structure of the U.S. stock market is highly similar to that of the Korean market, and geopolitical conflicts at the macro level and uncertainty about the interest rate outlook have further amplified market vulnerability. Once a correction occurs, a wave of leverage liquidation may trigger unexpected selling pressure. At present, institutions such as Charles Schwab have begun to tighten margin requirements and control risks in advance. However, the leverage level of the overall market continues to rise, and this risk has not yet been fully priced by the market.

3. Wmax comprehensive research and judgment and core tracking clues

Combining the two major risks of inflation and leverage, Wmax makes a comprehensive judgment on the subsequent market and policies:

1. policy path: The stickiness of inflation beyond expectations will continue to suppress the Fed's policy space, and there is no hope of short-term interest rate cuts. The probability of raising interest rates within the year still exists, and the high interest rate environment will remain for a longer period of time, which will further increase the cost and risk of leveraged funds;
2. market risk: The current rise in U.S. stocks is highly dependent on leveraged funds. The deviation between valuation and fundamentals continues to expand. With the high interest rate environment, market vulnerability has increased significantly. Any negative impact may trigger a wave of leveraged liquidations and trigger drastic adjustments;
3. structural opportunities: Energy and consumer staples sectors supported by inflationary stickiness, as well as hard technology sectors that benefit from AI infrastructure demand, still have relative allocation value; highly leveraged and highly valued theme stocks face greater risk of correction.

In the future, we will focus on tracking three core clues: first, follow-up U.S. PCE and CPI inflation data to verify the pace of inflation decline; second, changes in the scale of U.S. stock margin debt and leveraged ETFs to monitor the degree of risk accumulation; third, Fed officials’ statements and policy trends to grasp changes in policy rhythm.