The Bond Market’s Fear Gauge

The Bond Market’s Fear Gauge

The MOVE Index, short for Merrill Lynch Option Volatility Estimate, is often called the bond market’s version of the VIX. While the VIX measures expected volatility in stock prices, the MOVE Index tracks expected volatility in U.S. Treasury yields. In simple terms, it reflects how turbulent investors expect the bond market to be in the near future.

Why the MOVE Index Rises

When traders anticipate bigger swings in interest rates—perhaps because of inflation uncertainty, changing Federal Reserve policy, or economic shocks—they’re willing to pay more for options on Treasuries. Those higher option prices translate directly into higher implied volatility, which pushes the MOVE Index upward.

What It Means When It Rises

If the MOVE Index jumps, it means people expect the bond market to be shaky or uncertain. They aren’t sure if rates will go up or down — they just expect lots of movement. When this happens, it costs more to protect against risk, and some people move their money into safer places like U.S. government bonds.

A Way to Measure Confidence

The MOVE Index is like a “mood meter” for the bond market. When it’s low, people feel calm and confident about what will happen next. When it’s high, it means there’s worry and stress in the system. Watching the MOVE Index helps investors see how steady or shaky the financial world feels.