A key measure of bond volatility surged this week to its highest level since the early days of the Iran war. That should be a worrisome sign for a lot of investors.

The ICE BofA U.S. Bond Market Option Volatility Estimate Index, or MOVE index, is designed to track U.S. bond market volatility via prices on a basket of options. It is roughly a counterpart to the VIX index for stocks.

On Wednesday, the MOVE index level surged from 78 to 95, its highest close since the beginning of April. On Thursday, it has backtracked only slightly, now sitting at around 93, according to Intercontinental Exchange data.

That is still short of where it regularly was from 2022 to 2025. But the jump is still a worry, because up until now the recent march upwards in Treasury yields had come against a backdrop of still-subdued volatility. It suggests the market could be moving to a new, less orderly phase of trading.

And even for passive index investors, it could signal another development: Wider spreads.

Spreads refer to the yield gap between Treasurys and other bonds, like corporate or mortgage bonds. This gap has been quite tight for the highest-rated corporate bonds in particular, despite the recent jump in yields.

But higher volatility is a typical driver of wider spreads. So if bond volatility were to persistently rise, investors in corporate bonds or mortgage bonds could see more losses on those bonds than on Treasurys.

Through Wednesday, the spread on ICE BofA's index of top-rated U.S. corporate bonds hadn't seen a big widening jump. But high-grade credit strategists at JPMorgan Chase, in a Thursday morning note, warned that there could be a slowdown of investor money flowing into bond ETFs.

"A further pickup in rate and/or equity volatility would likely dampen these flows as well, leading to broader outflows for the asset class," they wrote.

If losses on corporate bonds were to start to pick up speed, then we could soon be talking of a 2022-style bond market wipeout all over again.