Treasury yields are takin’ it easy
Volatility in the Treasury bond market has fallen to its lowest level in nearly four years—a potential sign of good things to come for mortgage rates, the economy, and the stock market.
The Merrill Lynch Option Volatility Estimate Index (MOVE Index), which measures expectations of future volatility in yields on U.S. Treasury securities, is currently below 70 (see the chart). That hasn’t occurred since December 2021, shortly before the Fed began raising interest rates to combat inflation. (Like its better-known cousin, the Cboe Volatility Index (VIX Index), which measures expected volatility among stocks, the MOVE index is calculated from implied volatility from options markets.)
Translation: Investors don’t expect Treasury yields to swing significantly higher or lower over the near term. That’s important, because stability in the U.S. Treasury market gives investors greater clarity about the valuations of riskier assets such as domestic and international stocks—as well as greater confidence in those assets’ return potential.
MOVE Index
Bloomberg, calculations by Horizon, data as of 10/24/2025.
Additionally, falling interest rate volatility could help push mortgage rates lower and, in turn, boost overall economic activity.
Treasury yield volatility could potentially move even lower from here, given this week’s widely predicted Fed interest rate cut and investors’ expectation that another cut will occur at the Fed’s December meeting. Relatively stable economic data and a steady march toward a roughly 3% federal funds rate already implied in futures prices would likely help boost consumer sentiment—and give investors the confidence they need to keep supporting stock prices.