Margin debt in the United States reached a record $1.21 trillion in November, marking a $30 billion increase and the seventh consecutive month of growth. Over the past seven months, margin debt has risen by a total of $364 billion, representing an approximate 43 percent increase. Adjusted for inflation, the monthly growth was 2 percent, with an annual rise of 32 percent, the highest level recorded to date. This surge reflects increasing leverage in the US investment market, where investors borrow from brokers to purchase more shares or securities with less personal capital, amplifying potential profits but also financial risks. Currently, margin debt accounts for about 5.5 percent of the US M2 money supply, the highest ratio since 2007 and surpassing levels seen during the 2000 dot-com bubble. This indicates an exceptionally high reliance on borrowed funds for investments. Such elevated leverage poses risks for investors and financial institutions alike, as greater market volatility could lead to substantial losses. Historically, rising margin debt has often preceded financial crises, prompting experts to advise caution. The upward trend in margin debt also signals increased risk tolerance among investors and potential uncertainties in the market, warranting close monitoring of its impact on investment strategies and financial policies in the coming months.
Source: binance
