Market volatility driven by liquidity constraints

Market volatility has emerged as a defining characteristic of the current financial landscape, with price adjustments occurring through aggressive spikes driven by catalysts such as oil and interest rate shifts. Data shows the average CBOE VIX moved from 25.60 in March to 17.99 in June.

Limited liquidity is significantly impacting price action, as smaller orders can drive prices further and trigger stop-loss orders more quickly. According to a May 2026 report from The Fed, Treasury liquidity during periods of stress in March approached historic lows, contributing to higher volatility levels.