The VIX of bonds is rising but bitcoin and stocks aren't hearing it yet
In this news:
Key takeaways
- The MOVE index is showing higher lows while stock market volatility drops.
- The MOVE index tracks expected swing in U.S. Treasury yields over a month.
- Macro analysts note that bond market turbulence historically precedes stock market stress.
Are bitcoin and U.S. stocks truly calm and poised for more gains, or is this the calm before the storm? That is the question some macro observers are asking.
They point to rising volatility in Treasury notes, which underpin global finance, as an early sign of stress that usually spills over into other markets with a lag.
“The MOVE index is making higher lows while the VIX makes lower highs. The MOVE leads: it flashed turbulence before the VIX in 2022, in 2023, and at the start of the Iran war. Stocks are usually the last to get the message,” Kurt S. Altrichter, wealth manager and writer of the RiskSIGNAL Report, said.
The MOVE Index, officially the ICE BofA U.S. Bond Market Option Volatility Estimate, is the bond market’s version of the VIX. It gauges how much U.S. Treasury yields are expected to swing over the next month, using options on 2-, 5-, 10- and 30-year bonds, with the 10-year given the heaviest weight. In plain terms, it tells us how much movement traders are pricing into Treasury yields over the next month, without saying whether yields will go up or down.
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