The past two weeks have been busy in the market. Volatility has skyrocketed, and many new trading records have been hit. Today we summarize what happened and how recent activity and market movements are compared to normal.
Stocks and bonds affected by tariff news
Before Q1 ended, the US market was already beginning to decline. Fear of new tariffs affecting US import costs, US production, and the costs of the economy as a whole, was beginning to weigh stocks.
Then, after the market closed on Wednesday, April 2nd, President Trump announced his long-awaited “”.Mutual Tariffs. “These were much higher than expected and affected almost every country the US traded. It shocked the market.
A week later, Inventory has skyrocketed After mutual tariffs were delayed 90 days. The Nasdaq Composite Index scored over 12%, the second best day ever.
The stocks were not the only ones to see the oversized returns. The US 10-year Treasury Department was also sold, with yields rising from under 3.9% to almost 4.6%, with a rise of around 66 bee points over a week. That’s something that doesn’t usually happen in risk-off markets, and experts wonder why bond buyers are suddenly cooling the Treasury’s safety.
Chart 1: 10 years in the US and NASDAQ-100 news and movements over the past two weeks
Click here to view larger images
Many other markets also saw a dramatic re-rick. High yield bonds saw their credit bid The spread rises. Cryptocurrencies, oil and the US dollar also fell. Gold was one of the few assets to gather.
High volatility, but not record
As the market was sold and uncertainty increased, the VIX (implicit volatility) index spiked.
Since the VIX index was created in 1992, there have been many large spikes. The closing high set at just 52.3 this month is far from the record (the grey area below).
Previously, we focused on promoting volatility to increase inventory spreads and thus transaction costs. This is because market makers are more likely to lose to unfavourable choices and informed traders in fast markets.
Interestingly, the Bid Ask spread has also increased over the past two weeks, approaching record levels since 2017. The data also shows that the S&P 500 spread actually increased prior to the VIX spikes (purple dots below).
Chart 2: US spreads spread before recent VIX spikes
Stock volumes rise to new records
As the market moved, trading volumes also skyrocketed. In fact, in the period since the US election, we have seen nine of the top 10 days so far. A new record of about 31 billion shares was traded on April 9th, more than double the average last year.
As we often see in our moving markets, fewer traders are willing to wait until they get closer to trade.
MOC volumes fell during Covid volatility, but they have been popular ever since, accounting for almost 6% of the average daily volume on a regular day. Over the past week, MOC volumes have fallen below 5% of the daily total volume (blue dots below).
Chart 3: The 9th, the biggest trading day in the top 10 in the last four months, has been held so far
Options volumes hit new records as trading increases
Options trading has also increased, setting a new record (101.9 million contracts are traded) for contracts traded on April 4, 2025.
The put-call ratio also increases rapidly, indicating that trading offers negative side protection for investors (green dots below, inverted axis).
Chart 4: Put Call Ratio Signal Investors are relatively less bearish than in the previous period of market stress
Retailers were on sale after the tariff announcement (just a few days)
Retailers were primarily buying shares in 2025, even if the market was sold until February (Dark Green Line).
After mutual tariff announcements, data shows many days, with net retailers selling significantly. Some of those days saw a wider range of sales, but most sectors were net sales. However, it was also partially offset by large (over $1 billion) DIP purchases.
Chart 5: Consistently retail dip buyers until retaliation fees are announced
A reminder on how market protection works
This kind of volatility in the market is nothing new.
Importantly, for investors, the stock market has many guardrails designed to delay uncertainty-driven sales, including:
1. Market Wide Circuit Breaker (MWCB), When the market drops significantly, all stocks will halt for 15 minutes. They are designed to give buyers the opportunity to understand the impact of news and better assess the new fair value for their purchase. These are caused by daytime waterfalls in the S&P 500 index and work as shown in the table below. It highlights that the market saw four MWCBs during COVID selloff in March 2020.
2. Limit/Luld down (LULD), It is designed to stop excess volatility in each inventory individually. When inventory moves (or up) very quickly, the stock is first placed in a “limited state.” There, additional sales (or purchases) cannot move further prices, but offsetting orders will also bring the stock price towards a faster price level. If that doesn’t happen after 15 seconds, inventory will halt for 15 minutes and resume at auction.
Table 1: How MWCB, LULD, and CE Guardrails work
3. Clearly it’s a mistake (CE) There are rules for allowing obvious errors (such as “fat fingers”) to be traded. However, CE trading is relatively rare as the market does not match stock lower (or higher) than the LULD band.
4. Short selling The rules also affect stocks that have dropped 10% in a day. As a result, the next day, the old “rise rule” variations apply, prohibiting short selling at the time of bidding, preventing short sellers from pushing down the bid price via transactions.
There may be an increase in uncertainty in the future
Volatility has settled since the 90-day extension of mutual tariffs. However, the final tariffs are far from known, so there could be more uncertainty (and transaction spikes) throughout 2025.
