Credit writedowns

Margin #debt is at a record high in #US markets

According to the US Financial Industry Regulatory Authority, investors have borrowed a record $642.8 billion against investment portfolios. The leverage from this margin debt is a bid to increase returns, but it leaves investors vulnerable if asset prices decline. There was a market correction in February, but the question remains whether the recent correction was a one-off event. Either way, this is where the Federal Reserve has to be concerned about financial stability. When the credit markets become an integral facet sustaining asset markets, a sustained fall in asset prices can boomerang back onto the financial system.

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