MOVE has the unique ability to provide a signal of the change in risk sentiment in the fixed income market and it tends to move between 80 and 120, with 80 representing a situation of extreme complacency and 120 representing a feeling of extreme fear. Movements towards extremes are quite rare. Movements below 80 preceded the recession of 91, the dot.com bubble and the recent credit crisis. A reading below 80 tends to portend a market problem/anomaly.
Since implied is the cost of insurance , MOVE measures investors' willingness to purchase risk insurance . The lower this index, the lower the demand for risk protection. Furthermore, the MOVE can remain low for a long time before a market event occurs.
To get an idea of the sentiment of the stock and bond markets, large investors often monitor the relationship between MOVE and . The dynamics of the ratio between these two indices is therefore a barometer of what it provides, which could be the outflow from one asset class to another: a low ratio favors fixed income, a high ratio favors equity.