U.S. investors cut their use of leverage in July, marking the first month since the onset of the pandemic that saw a reduction in the use of margin debt to buy securities such as stocks, potentially a warning sign for markets buoyed by heavy use of borrowed money.
Data from the Financial Industry Regulatory Authority (FINRA) on the use of margin debt, which is money borrowed by investors from brokers to buy securities, show $844 billion borrowed against portfolios in July. That’s the first month the metric has dipped since embarking on a steady month-over-month climb in March 2020, when it stood at $479 billion. Margin loans had hit a record high of $882 billion in June 2021, according to FINRA figures.
