Short-Term vs Long-Term Treasuries
Live side-by-side comparison with current values, changes, and key statistics.
Why This Comparison Matters
SHY is essentially cash with minimal duration risk, while TLT carries massive duration exposure. When SHY outperforms TLT, the curve is flattening or rates are rising. When TLT outperforms SHY, rates are falling and the curve may be steepening from the long end. This is the simplest way to track the curve trade through ETFs.
Cross-Asset Analysis
1-3Y Treasury (SHY) (iShares 1-3 Year Treasury Bond ETF, short duration) and 20Y+ Treasury (TLT) (iShares 20+ Year Treasury Bond ETF, long-duration rates proxy) are priced in separate markets, yet their co-movement tells macro desks something neither series reveals alone. Late-cycle environments force 1-3Y Treasury (SHY) and 20Y+ Treasury (TLT) to express their respective defensive and cyclical tilts more sharply, making the spread a useful regime tell. Index construction choices inside 1-3Y Treasury (SHY) and 20Y+ Treasury (TLT), including weighting methodology and inclusion rules, create persistent tilts that show up in the spread.
A peer comparison like 1-3Y Treasury (SHY) versus 20Y+ Treasury (TLT) strips out the common-factor beta and leaves behind the differences in sector mix, capitalization, style, or geography. Corporate action events, including buybacks or spin-offs affecting constituents of 1-3Y Treasury (SHY) or 20Y+ Treasury (TLT), can distort the spread relative to its intended factor tilt. Idiosyncratic events in a concentrated peer, such as a single mega-cap earnings miss inside 1-3Y Treasury (SHY), can move the 1-3Y Treasury (SHY)-20Y+ Treasury (TLT) spread without broader factor signal.
Structural changes inside 1-3Y Treasury (SHY) or 20Y+ Treasury (TLT), such as index reconstitution or methodology shifts, can break historical spread relationships in discrete jumps. Pairs trading between 1-3Y Treasury (SHY) and 20Y+ Treasury (TLT) is common because the spread is more stationary than either individual price, suitable for mean-reversion strategies.
90-Day Statistics
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Frequently Asked Questions
What is the relationship between 1-3Y Treasury (SHY) and 20Y+ Treasury (TLT)?+
1-3Y Treasury (SHY) and 20Y+ Treasury (TLT) 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 1-3Y Treasury (SHY) and 20Y+ Treasury (TLT) captures the specific macro signal that flows through this relationship.
When does 1-3Y Treasury (SHY) typically lead 20Y+ Treasury (TLT)?+
1-3Y Treasury (SHY) tends to lead 20Y+ Treasury (TLT) during rotation episodes between the two factor exposures. In those periods, moves in 1-3Y Treasury (SHY) precede corresponding moves in 20Y+ Treasury (TLT) by days to weeks, depending on the transmission channel and the depth of each market.
How are 1-3Y Treasury (SHY) and 20Y+ Treasury (TLT) historically correlated?+
Long-run correlation between 1-3Y Treasury (SHY) and 20Y+ Treasury (TLT) 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 1-3Y Treasury (SHY)-20Y+ Treasury (TLT) relationship.
What macro conditions drive divergence between 1-3Y Treasury (SHY) and 20Y+ Treasury (TLT)?+
Divergence between 1-3Y Treasury (SHY) and 20Y+ Treasury (TLT) 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 1-3Y Treasury (SHY) or 20Y+ Treasury (TLT).
Is 1-3Y Treasury (SHY) a hedge for 20Y+ Treasury (TLT)?+
Peers like 1-3Y Treasury (SHY) and 20Y+ Treasury (TLT) 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 1-3Y Treasury (SHY)-20Y+ Treasury (TLT) 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.