The previous two weeks have been busy for markets. Volatility spiked and plenty of new buying and selling information have been hit. In the present day, we summarize what went on and the way the latest exercise and market strikes examine to regular.
Shares and bonds each affected by tariff information
Earlier than Q1 ended, the U.S. market had already began to fall. Fears about new tariffs impacting the price of U.S. imports, U.S. manufacturing and the general financial system have been beginning to weigh on shares.
Then, after the markets closed on Wednesday, April 2, President Trump introduced the long-awaited “reciprocal tariffs.” These have been a lot increased than anticipated and affected nearly each nation the U.S. trades with – surprising the market.
One week later, shares soared after the reciprocal tariffs have been delayed 90 days. The Nasdaq Composite index gained greater than 12%, its second-best day ever.
Shares weren’t the one factor seeing outsized returns. U.S. 10-year Treasuries additionally bought off, pushing yields up from under 3.9% to nearly 4.6%, a rise of round 66 basis-points in simply over per week. That’s one thing that doesn’t usually occur in a risk-off market, leaving consultants questioning why bond consumers have been all of a sudden cooling on the protection of Treasuries.
Chart 1: Information and strikes in U.S. 10-year charges and the Nasdaq-100 over the previous two weeks
Click on right here to see bigger picture
Many different markets additionally noticed dramatic repricing. Excessive yield bonds noticed their credit score and bid-ask spreads rise. Crypto belongings, oil and the U.S.-dollar additionally fell. Gold was one of many few belongings to rally.
Volatility is excessive, however not at a file
Because the market bought off and uncertainty elevated, the VIX (implied volatility) index spiked.
Because the VIX index was created in 1992, there have been many giant spikes. The closing excessive set this month, at simply 52.3, is much from a file (gray space under).
We have now famous earlier than that volatility drives inventory spreads — and, subsequently, buying and selling prices — increased. That’s as a result of market makers usually tend to lose to hostile choice and knowledgeable merchants in a quick market.
Curiously, bid-ask spreads additionally elevated over the previous two weeks, and are nearer to file ranges since 2017. The info additionally reveals that S&P 500 spreads had, the truth is, been growing forward of the spike in VIX (purple dots under) – rising constantly since 2024.
Chart 2: U.S. spreads have been widening earlier than the latest spike in VIX
Inventory volumes climb to new information
As markets moved, buying and selling volumes additionally spiked. In truth, the interval for the reason that U.S. election has seen 9 of the highest 10 quantity days ever. A brand new file of virtually 31 billion shares traded on April 9, greater than double the typical from final yr.
As we frequently see in fast-moving markets, much less merchants are prepared to attend till the near commerce.
MOC volumes fell through the volatility of Covid, however they’d been trending up ever since, averaging nearly 6% of each day quantity on a traditional day. The previous week, MOC volumes fell under 5% of complete each day volumes (blue dots under).
Chart 3: 9 of the highest 10 largest buying and selling days ever have taken place over the previous 4 months
Choices volumes hit new information as put buying and selling will increase
Possibility buying and selling additionally elevated, setting a brand new file for contracts traded (with 101.9 million contracts traded) on April 4, 2025, which was the second day after the U.S. introduced retaliatory tariffs.
The put-call ratio additionally elevated rapidly, exhibiting that buying and selling grew to become rather more targeted on places, which provide draw back safety to traders (inexperienced dots under, axis inverted).
Chart 4: Put-call ratio signaling traders comparatively much less bearish than earlier durations of market stress
Retail bought (for just some days) after the tariff announcement
Retail merchants had been largely shopping for shares in 2025, even because the market bought off by February (darkish inexperienced line).
After the reciprocal tariff announcement, knowledge reveals plenty of days with vital web retail promoting. A few of these days additionally noticed extra broad-based promoting, with most sectors being web promote. Nonetheless, it was partly offset by some days of enormous (over $1 billion) dip shopping for, too.
Chart 5: Retail constant dip consumers up till retaliatory tariffs have been introduced
A reminder on how market protections work
Volatility like this in markets shouldn’t be new.
Importantly for traders, the inventory market has plenty of guardrails designed to gradual sell-offs brought on by uncertainty-driven sell-offs, together with:
1. Market Extensive Circuit Breakers (MWCB), which halt all shares for quarter-hour when the market falls considerably. These are designed to provide consumers an opportunity to grasp the impression of reports and higher assess new truthful values for purchasing. These are triggered by intraday falls (however not rises) within the S&P 500 Index, and work because the desk under reveals. We spotlight that the market noticed 4 MWCBs through the Covid sell-off in March 2020.
2. Restrict Up/Restrict Down (LULD), that are designed to cease extra volatility in every inventory, individually. When a inventory strikes down (or up) in a short time, that inventory is first put in a “restrict state,” the place further promoting (or shopping for) can’t transfer the worth extra, however offsetting orders can deliver the inventory worth towards earlier worth ranges. If that doesn’t occur after 15 seconds, the inventory is halted for quarter-hour and reopened with an public sale.
Desk 1: How MWCB, LULD and CE guardrails work
3. Clearly Misguided (CE) guidelines exist to permit for apparent error (like “fat-finger”) trades to be busted. Nonetheless, due to the existence of LULD bands, the place markets received’t match shares decrease (or increased) than the LULD bands, CE trades are comparatively uncommon.
4. Brief-selling guidelines additionally have an effect on shares which have fallen 10% in a day. For that and the subsequent day, a variation on the previous “uptick rule” applies, banning quick promoting on the bid, thereby guaranteeing quick sellers can’t drive bid costs down through trades.
There’s doubtless extra uncertainty forward
Volatility has calmed for the reason that 90-day extension of reciprocal tariffs. Nonetheless, closing tariffs are removed from recognized, which suggests we may even see extra durations of uncertainty (and buying and selling spikes) all through 2025.
The previous two weeks have been busy for markets. Volatility spiked and plenty of new buying and selling information have been hit. In the present day, we summarize what went on and the way the latest exercise and market strikes examine to regular.
Shares and bonds each affected by tariff information
Earlier than Q1 ended, the U.S. market had already began to fall. Fears about new tariffs impacting the price of U.S. imports, U.S. manufacturing and the general financial system have been beginning to weigh on shares.
Then, after the markets closed on Wednesday, April 2, President Trump introduced the long-awaited “reciprocal tariffs.” These have been a lot increased than anticipated and affected nearly each nation the U.S. trades with – surprising the market.
One week later, shares soared after the reciprocal tariffs have been delayed 90 days. The Nasdaq Composite index gained greater than 12%, its second-best day ever.
Shares weren’t the one factor seeing outsized returns. U.S. 10-year Treasuries additionally bought off, pushing yields up from under 3.9% to nearly 4.6%, a rise of round 66 basis-points in simply over per week. That’s one thing that doesn’t usually occur in a risk-off market, leaving consultants questioning why bond consumers have been all of a sudden cooling on the protection of Treasuries.
Chart 1: Information and strikes in U.S. 10-year charges and the Nasdaq-100 over the previous two weeks
Click on right here to see bigger picture
Many different markets additionally noticed dramatic repricing. Excessive yield bonds noticed their credit score and bid-ask spreads rise. Crypto belongings, oil and the U.S.-dollar additionally fell. Gold was one of many few belongings to rally.
Volatility is excessive, however not at a file
Because the market bought off and uncertainty elevated, the VIX (implied volatility) index spiked.
Because the VIX index was created in 1992, there have been many giant spikes. The closing excessive set this month, at simply 52.3, is much from a file (gray space under).
We have now famous earlier than that volatility drives inventory spreads — and, subsequently, buying and selling prices — increased. That’s as a result of market makers usually tend to lose to hostile choice and knowledgeable merchants in a quick market.
Curiously, bid-ask spreads additionally elevated over the previous two weeks, and are nearer to file ranges since 2017. The info additionally reveals that S&P 500 spreads had, the truth is, been growing forward of the spike in VIX (purple dots under) – rising constantly since 2024.
Chart 2: U.S. spreads have been widening earlier than the latest spike in VIX
Inventory volumes climb to new information
As markets moved, buying and selling volumes additionally spiked. In truth, the interval for the reason that U.S. election has seen 9 of the highest 10 quantity days ever. A brand new file of virtually 31 billion shares traded on April 9, greater than double the typical from final yr.
As we frequently see in fast-moving markets, much less merchants are prepared to attend till the near commerce.
MOC volumes fell through the volatility of Covid, however they’d been trending up ever since, averaging nearly 6% of each day quantity on a traditional day. The previous week, MOC volumes fell under 5% of complete each day volumes (blue dots under).
Chart 3: 9 of the highest 10 largest buying and selling days ever have taken place over the previous 4 months
Choices volumes hit new information as put buying and selling will increase
Possibility buying and selling additionally elevated, setting a brand new file for contracts traded (with 101.9 million contracts traded) on April 4, 2025, which was the second day after the U.S. introduced retaliatory tariffs.
The put-call ratio additionally elevated rapidly, exhibiting that buying and selling grew to become rather more targeted on places, which provide draw back safety to traders (inexperienced dots under, axis inverted).
Chart 4: Put-call ratio signaling traders comparatively much less bearish than earlier durations of market stress
Retail bought (for just some days) after the tariff announcement
Retail merchants had been largely shopping for shares in 2025, even because the market bought off by February (darkish inexperienced line).
After the reciprocal tariff announcement, knowledge reveals plenty of days with vital web retail promoting. A few of these days additionally noticed extra broad-based promoting, with most sectors being web promote. Nonetheless, it was partly offset by some days of enormous (over $1 billion) dip shopping for, too.
Chart 5: Retail constant dip consumers up till retaliatory tariffs have been introduced
A reminder on how market protections work
Volatility like this in markets shouldn’t be new.
Importantly for traders, the inventory market has plenty of guardrails designed to gradual sell-offs brought on by uncertainty-driven sell-offs, together with:
1. Market Extensive Circuit Breakers (MWCB), which halt all shares for quarter-hour when the market falls considerably. These are designed to provide consumers an opportunity to grasp the impression of reports and higher assess new truthful values for purchasing. These are triggered by intraday falls (however not rises) within the S&P 500 Index, and work because the desk under reveals. We spotlight that the market noticed 4 MWCBs through the Covid sell-off in March 2020.
2. Restrict Up/Restrict Down (LULD), that are designed to cease extra volatility in every inventory, individually. When a inventory strikes down (or up) in a short time, that inventory is first put in a “restrict state,” the place further promoting (or shopping for) can’t transfer the worth extra, however offsetting orders can deliver the inventory worth towards earlier worth ranges. If that doesn’t occur after 15 seconds, the inventory is halted for quarter-hour and reopened with an public sale.
Desk 1: How MWCB, LULD and CE guardrails work
3. Clearly Misguided (CE) guidelines exist to permit for apparent error (like “fat-finger”) trades to be busted. Nonetheless, due to the existence of LULD bands, the place markets received’t match shares decrease (or increased) than the LULD bands, CE trades are comparatively uncommon.
4. Brief-selling guidelines additionally have an effect on shares which have fallen 10% in a day. For that and the subsequent day, a variation on the previous “uptick rule” applies, banning quick promoting on the bid, thereby guaranteeing quick sellers can’t drive bid costs down through trades.
There’s doubtless extra uncertainty forward
Volatility has calmed for the reason that 90-day extension of reciprocal tariffs. Nonetheless, closing tariffs are removed from recognized, which suggests we may even see extra durations of uncertainty (and buying and selling spikes) all through 2025.
