IEF vs SHY (Intermediate vs Short Treasury)
IEF (iShares 7-10 Year Treasury Bond ETF, duration 7.5 years, AUM ~$30 billion) shows a 30-day SEC yield of approximately 4.20 percent in April 2026. SHY (iShares 1-3 Year Treasury, duration 1.9 years, AUM ~$25 billion) shows a 30-day SEC yield of approximately 3.81 percent.
Also known as: 7-10Y Treasury (IEF) (ETF_IEF) · 1-3Y Treasury (SHY) (ETF_SHY)
Why This Comparison Matters
IEF (iShares 7-10 Year Treasury Bond ETF, duration 7.5 years, AUM ~$30 billion) shows a 30-day SEC yield of approximately 4.20 percent in April 2026. SHY (iShares 1-3 Year Treasury, duration 1.9 years, AUM ~$25 billion) shows a 30-day SEC yield of approximately 3.81 percent. The IEF/SHY ratio sits at approximately 1.16, reflecting the 10Y minus 1Y spread of 46 basis points (positive, normal-shaped). The pair is the cleanest curve-shape trade in the Treasury ETF complex, with IEF outperforming during bull flatteners and SHY outperforming during bear flatteners or curve inversions.
What IEF and SHY Capture
IEF (iShares 7-10 Year Treasury Bond ETF) holds nominal Treasury bonds maturing in 7 to 10 years. April 2026: 30-day SEC yield approximately 4.20 percent, modified duration approximately 7.5 years, AUM approximately $30 billion, expense ratio 0.15 percent.
SHY (iShares 1-3 Year Treasury Bond ETF) holds nominal Treasury bonds maturing in 1 to 3 years. April 2026: 30-day SEC yield approximately 3.81 percent, modified duration 1.9 years, AUM approximately $25 billion, expense ratio 0.15 percent. The pair is the cleanest curve-shape trade in the Treasury ETF complex: IEF captures the long-duration intermediate sleeve, SHY captures the cash-equivalent short sleeve. The IEF/SHY ratio of approximately 1.16 in April 2026 reflects post-cycle re-steepening from the deeply inverted 2022 to 2024 era.
The Yield Curve Trade
The IEF-SHY spread directly reflects the 10Y minus 1Y nominal yield differential. April 2026: 10Y at 4.31 percent minus 1Y at 3.85 percent equals 46 basis points (positive, normal-shaped). The pair operates as a duration-mismatched curve trade.
Mathematics: IEF duration 7.5 years, SHY duration 1.9 years (3.95x ratio). A 100 basis point parallel yield rise produces 7.5 percent IEF decline and 1.9 percent SHY decline. A 100 basis point steepener (10Y up 100, 1Y unchanged) produces 7.5 percent IEF decline and zero SHY effect. The pair is therefore most sensitive to long-end moves rather than parallel shifts. In a steepener regime, SHY outperforms; in a flattener regime, IEF outperforms.
Bull vs Bear Steepeners and Flatteners
Curve moves come in four flavors. Bull steepener: short rates fall faster than long rates (Fed easing scenario). IEF rallies, SHY rallies more, ratio falls. Bear steepener: long rates rise faster than short rates (fiscal or term premium scenario). IEF falls, SHY flat, ratio falls. Bull flattener: long rates fall faster than short rates (recession or QE scenario). IEF rallies, SHY flat, ratio rises. Bear flattener: short rates rise faster than long rates (Fed hike scenario). IEF flat, SHY falls, ratio rises.
April 2026 is mid-bull-steepener territory: Fed cut 100 basis points September to December 2024, taking SHY from 5.50 percent yield to 3.81 percent (170 basis point compression), while IEF moved from 5.00 percent to 4.20 percent (80 basis points). The ratio rose from 1.05 (October 2023) to 1.16 (April 2026). Future Fed cuts would extend this dynamic; Fed pause would compress further movement.
Conditional Forward Response (Tail Events)
How 1-3Y Treasury (SHY) has historically behaved in the 5 sessions following a top-decile or bottom-decile daily move in 7-10Y Treasury (IEF). Computed from 1,289 aligned daily observations ending .
Following these triggers, 1-3Y Treasury (SHY) falls 0.01% on average over the next 5 sessions, versus an unconditional baseline of -0.02%. 129 qualifying events; 1-3Y Treasury (SHY) closed positive in 47% of them.
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Frequently Asked Questions
What does IEF vs SHY capture?+
The pair captures the yield curve shape between the intermediate Treasury (7-10 years, IEF) and short Treasury (1-3 years, SHY). The IEF/SHY ratio directly reflects the 10Y minus 1Y nominal yield differential. April 2026: ratio 1.16, spread 46 basis points (positive, normal-shaped). The pair is the cleanest curve trade in liquid Treasury ETFs, with IEF exposure to the long-duration intermediate sleeve and SHY exposure to the cash-equivalent short sleeve.
How does the 10Y-1Y spread relate to IEF/SHY?+
The IEF/SHY ratio approximately tracks the 10Y minus 1Y nominal yield spread. Ratio of 1.16 (April 2026) corresponds to spread approximately 46 basis points. Ratio of 1.05 (October 2023 inversion trough) corresponded to spread approximately negative 130 basis points. Ratio of 1.20 to 1.25 typically corresponds to spread 80 to 120 basis points (normal historical curve). Ratio shifts of 0.05 over 60 days signal regime change.
What are the four curve regimes?+
Bull steepener: short rates fall faster than long rates (Fed easing). Bear steepener: long rates rise faster than short rates (fiscal or term premium). Bull flattener: long rates fall faster than short rates (recession or QE). Bear flattener: short rates rise faster than long rates (Fed hiking against inflation). April 2026 is mid-bull-steepener: Fed cut 100 basis points September to December 2024, ratio rose from 1.05 to 1.16. The four-quadrant taxonomy is essential for interpreting any IEF/SHY ratio shift.
What did the 2022-24 inversion teach us?
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