Fixed Income Calm Amid Volatility Collapse

The fixed income market report, dated October 27, 2025, provides a detailed analysis confirming a “CALM WITH DECLINING VOLATILITY” environment, highlighted by the bond market’s fear gauge, the MOVE Index, falling sharply to 68.94. The analysis notes stable credit markets, with both high yield and investment-grade corporate bonds showing resilient performance and minimal spread movement against flat Treasuries. Although overall risk is assessed as low-to-moderate, the report cautions that the extremely low volatility might indicate complacency and flags sector-specific weaknesses, particularly in Commercial Mortgage-Backed Securities (CMBS) and extreme volatility in Turkish sovereign rates. Consequently, the report recommends maintaining an overweight position in corporate credit but advises keeping hedges due to the historically low volatility levels.