Market volatility means uncertainty about the price fluctuations. A highly volatile market means that there is high uncertainty regarding the price movement of stocks and bonds in the market. Whereas when the market is stable the market volatility is low.
There are several reasons that can a market highly volatile. For example, a country is on the verge of starting a war with a neighboring country, foreign businesses might affect and this will make the market highly volatile. Another example is a natural calamity or pandemic like COVID-19 has affected the stock and bond markets adversely and during the first wave, the stocks were highly volatile for industries other than health professionals.
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When stock market volatility is high, corporate bond yields tend to