Hardening is a reference to trading conditions in which securities prices are rising and volatility is declining in a particular financial market. This typically occurs when investors perceive that the market has reached its highest point, or top, and are unwilling to sell even though fears of overvaluation have subsided. Hardened markets can exist at any time during the past few years, but there hasn't been much discussion of them since early 2001.Hardening may indicate that the market has become less risky and traders have entered into tighter positions than they would have previously. The word "hardening" is also used as an adjective or noun to refer to changes in the marketplace that lead to tightening of credit spreads or other measures of riskiness.
