TIPS (TIP) vs Intermediate Treasury (IEF)
TIP (iShares TIPS Bond ETF, modified duration ~7 years, AUM ~$22 billion) trades around $108 in April 2026 with a real yield of 1.87 percent. IEF (iShares 7-10 Year Treasury Bond ETF, duration 7.5 years, AUM ~$30 billion) trades around $96 with a 30-day SEC yield of 4.20 percent.
Also known as: TIPS (TIP) (ETF_TIP, TIPS) · 7-10Y Treasury (IEF) (ETF_IEF)
Why This Comparison Matters
TIP (iShares TIPS Bond ETF, modified duration ~7 years, AUM ~$22 billion) trades around $108 in April 2026 with a real yield of 1.87 percent. IEF (iShares 7-10 Year Treasury Bond ETF, duration 7.5 years, AUM ~$30 billion) trades around $96 with a 30-day SEC yield of 4.20 percent. The TIP/IEF ratio sits at approximately 1.12. Both ETFs have nearly identical duration profiles, so the ratio strips out duration risk and directly isolates the 10-year breakeven inflation component (currently 2.44 percent). TIP/IEF is the cleanest market-implied breakeven inflation gauge available among liquid ETFs.
What TIP and IEF Capture
TIP (iShares TIPS Bond ETF) holds U.S. Treasury Inflation-Protected Securities with average maturity around 7 years. April 2026: 30-day SEC yield approximately 2.5 percent (real yield), trailing 12-month yield approximately 4.5 percent (includes inflation accruals), modified duration approximately 7 years, AUM approximately $22 billion, expense ratio 0.18 percent.
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. The pair is the cleanest TIPS-vs-nominal comparison available because both ETFs have nearly identical duration profiles (7.0 vs 7.5 years), so the ratio strips out duration risk and isolates the breakeven inflation component.
Why Same-Duration Comparison Isolates Breakeven
TIP/IEF is structurally cleaner than TIP/TLT (long-bond) because matched duration eliminates the largest source of relative noise. TIP duration 7.0 vs IEF duration 7.5 means a 100 basis point yield rise produces approximately 7 percent TIP decline and 7.5 percent IEF decline. The duration mismatch is only 0.5 percent of NAV per 100 basis point yield move, small relative to typical breakeven moves of 50 to 200 basis points (3 to 14 percent ratio moves).
By contrast, TIP/TLT (TLT duration 17 years) is dominated by duration mismatch. A 100 basis point yield rise produces 7 percent TIP decline and 17 percent TLT decline (10 percentage point gap). Breakeven moves get drowned by duration moves in the long-bond comparison. The intermediate-duration pairing makes TIP/IEF the cleanest market-implied breakeven inflation gauge available among liquid ETFs.
TIP/IEF Ratio as Breakeven Tracker
The TIP/IEF ratio captures the spread between inflation-protected and nominal Treasury yields at similar duration. Long-run correlation between TIP/IEF ratio changes and 10-year breakeven inflation changes is approximately 0.90 (high positive). A 100 basis point breakeven move produces approximately 7 percent ratio move, consistent with the 7-year duration of both ETFs.
Conditional Forward Response (Tail Events)
How 7-10Y Treasury (IEF) has historically behaved in the 5 sessions following a top-decile or bottom-decile daily move in TIPS (TIP). Computed from 1,289 aligned daily observations ending .
Following these triggers, 7-10Y Treasury (IEF) falls 0.28% on average over the next 5 sessions, versus an unconditional baseline of -0.09%. 129 qualifying events; 7-10Y Treasury (IEF) closed positive in 40% of them.
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Frequently Asked Questions
What does TIP vs IEF capture?+
TIP/IEF captures the spread between inflation-protected and nominal Treasuries at similar duration. Both ETFs have approximately 7-year duration, so the ratio strips out duration risk and isolates the breakeven inflation component. The ratio is the cleanest market-implied breakeven inflation gauge available among liquid ETFs. Long-run correlation between TIP/IEF ratio changes and 10-year breakeven inflation changes is approximately 0.90 (high positive).
Why is TIP/IEF cleaner than TIP/TLT for breakeven?+
TIP duration is approximately 7 years; IEF duration is 7.5 years. The 0.5-year duration mismatch produces only 0.5 percent of NAV per 100 basis point yield move, small relative to typical breakeven moves of 50 to 200 basis points (3 to 14 percent ratio moves). TLT duration is 17 years, so TIP/TLT has 10-year duration mismatch, producing 10 percent of NAV per 100 basis point yield move. Duration noise dominates breakeven signal in TIP/TLT but not in TIP/IEF.
How does the ratio relate to 10-year breakeven?+
The TIP/IEF ratio approximately tracks 10-year breakeven inflation. Ratio of 1.10 corresponds approximately to breakeven of 2.0 to 2.2 percent. Ratio of 1.12 (April 2026) corresponds to breakeven 2.4 to 2.5 percent. Ratio of 1.18 to 1.20 corresponds to breakeven above 2.6 percent. A 100 basis point breakeven move produces approximately 7 percent ratio move (consistent with the 7-year duration of both ETFs). The relationship is the closest direct breakeven readout available in liquid ETFs.
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