Lack of liquidity "shakes" the US stock market - ConsultFX

Lack of liquidity "shakes" the US stock market


The US stock market, currently experiencing one of the strongest collapses in recent years, faced a lack of liquidity. This phenomenon is called "ghost", terrifying investors.

This phenomenon was often recalled by market players who made it during periods of collapse, but in the last decade there was plenty of liquidity in the market. As a result, most traders have forgotten what this "ghost" is. Many of them, especially beginners, have never experienced a lack of liquidity. Note that in such extreme conditions did not work and trading robots, which now account for over 50% of the market.

According to analysts, the more they fall in the price of paper, the less liquidity becomes. Experts believe that the current situation in the stock market is worse than during the collapse in February 2018, provoked by a surge in volatility.

In the outgoing year, liquidity in some stocks declined significantly and for some stocks fell below historic lows. Experts blame the US Federal Reserve System (FRS) for lack of liquidity. Analysts do not exclude that the regulator deliberately brought down the markets in order to influence the impressive financial "bubble".

However, every cloud has a silver lining: amid the flight from risky assets, Washington managed to solve one of the important issues, the increase in the cost of government loans. With ten-year treasuries yielding 3% or more, the US state budget experienced a number of problems due to rising interest payments, but now the figure has decreased to 2.8% from the previous 3.2%. Thanks to this, the situation has stabilized, experts say.


The material has been provided by InstaForex Company -