IEF vs SHY (Intermediate vs Short Treasury)
Live side-by-side comparison with current values, changes, and key statistics.
Why This Comparison Matters
IEF versus SHY is a clean duration trade: when IEF outperforms SHY, long rates are falling faster than short rates, meaning the curve is flattening or bull flattening. When SHY outperforms IEF, long rates are rising faster than short rates, a bear steepener typical of early-cycle reflations or fiscal concerns.
Cross-Asset Analysis
Before getting to the spread, note what each leg actually represents: 7-10Y Treasury (IEF) is iShares 7-10 Year Treasury Bond ETF, and 1-3Y Treasury (SHY) is iShares 1-3 Year Treasury Bond ETF, short duration. 7-10Y Treasury (IEF) and 1-3Y Treasury (SHY) occupy the same asset class, and the relative performance between them isolates the specific factor that distinguishes one from the other. Corporate action events, including buybacks or spin-offs affecting constituents of 7-10Y Treasury (IEF) or 1-3Y Treasury (SHY), can distort the spread relative to its intended factor tilt. Pairs trading between 7-10Y Treasury (IEF) and 1-3Y Treasury (SHY) is common because the spread is more stationary than either individual price, suitable for mean-reversion strategies.
Structural changes inside 7-10Y Treasury (IEF) or 1-3Y Treasury (SHY), such as index reconstitution or methodology shifts, can break historical spread relationships in discrete jumps. Factor exposures embedded inside 7-10Y Treasury (IEF) and 1-3Y Treasury (SHY) drive their relative performance, with growth-value, large-small, and domestic-international all surfacing in the spread. Index construction choices inside 7-10Y Treasury (IEF) and 1-3Y Treasury (SHY), including weighting methodology and inclusion rules, create persistent tilts that show up in the spread.
A peer comparison like 7-10Y Treasury (IEF) compared to 1-3Y Treasury (SHY) strips out the common-factor beta and leaves behind the differences in sector mix, capitalization, style, or geography.
90-Day Statistics
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Frequently Asked Questions
What is the relationship between 7-10Y Treasury (IEF) and 1-3Y Treasury (SHY)?+
7-10Y Treasury (IEF) and 1-3Y Treasury (SHY) are connected through shared asset class exposure with different factor tilts. When the underlying asset class shifts, both respond, though with different sensitivities and at different speeds. The spread between 7-10Y Treasury (IEF) and 1-3Y Treasury (SHY) captures the specific macro signal that flows through this relationship.
When does 7-10Y Treasury (IEF) typically lead 1-3Y Treasury (SHY)?+
7-10Y Treasury (IEF) tends to lead 1-3Y Treasury (SHY) during rotation episodes between the two factor exposures. In those periods, moves in 7-10Y Treasury (IEF) precede corresponding moves in 1-3Y Treasury (SHY) by days to weeks, depending on the transmission channel and the depth of each market.
How are 7-10Y Treasury (IEF) and 1-3Y Treasury (SHY) historically correlated?+
Long-run correlation between 7-10Y Treasury (IEF) and 1-3Y Treasury (SHY) varies by regime. Peers in the same asset class are highly correlated in direction, with the spread reflecting factor tilts and rotation dynamics. The correlation is not stable: it shifts with macro conditions, and the periods when it breaks down are often the most informative moments in the 7-10Y Treasury (IEF)-1-3Y Treasury (SHY) relationship.
What macro conditions drive divergence between 7-10Y Treasury (IEF) and 1-3Y Treasury (SHY)?+
Divergence between 7-10Y Treasury (IEF) and 1-3Y Treasury (SHY) typically arises from index reconstitution, mega-cap earnings surprises, or liquidity differences between the peers. When one asset's idiosyncratic drivers dominate, the spread moves in ways that the common macro story does not predict, which is usually a signal to look more carefully at the specific drivers at work in 7-10Y Treasury (IEF) or 1-3Y Treasury (SHY).
Is 7-10Y Treasury (IEF) a hedge for 1-3Y Treasury (SHY)?+
Peers like 7-10Y Treasury (IEF) and 1-3Y Treasury (SHY) do not hedge each other; both rise or fall with the shared asset class, and using the pair as a spread trade is different from using it as a hedge. Effective hedging requires matching the hedge to the specific risk being protected, and the 7-10Y Treasury (IEF)-1-3Y Treasury (SHY) pair is best stress-tested under scenarios the investor most worries about before being sized into a real portfolio.
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Data sourced from FRED, CoinGecko, CBOE, and other providers. This page is for informational purposes only and does not constitute financial advice. Past performance does not guarantee future results.