7–10 Year Treasuries Beat the S&P 500 in H1 2025 — But the Trend May Be Turning
In the first half of 2025, U.S. Treasury bonds with maturities of 7–10 years outperformed the S&P 500.
This is a typical occurrence in times of uncertainty, but it doesn’t appear likely to last—at least in the short term.
The six-month return of the main S&P 500 ETF listed in New York is just under 1% (excluding dividends). This modest figure reflects the volatility that characterized the first half of 2025. But it becomes even more noteworthy when compared to another number: over the same six-month period, IEF—a USD-denominated ETF that invests in 7–10 year Treasuries—returned 3.93%.
This isn’t unusual behavior. In uncertain times, investors tend to favor more conservative assets. In 2025, the bond market has benefited both from a greater risk-off climate and from expectations of falling yields due to potential rate cuts or economic slowdown.
To better understand the source of this performance—and how things might develop in the coming months—it’s helpful to look at the relative strength ratio between the two instruments. This is shown in the chart above.
We can observe that the ratio trended upward until March, then dropped sharply through mid-April, and has been rising again since May.
Interestingly, a bullish crossover recently occurred between the 50-day and 200-day moving averages—an indication that could suggest a potential further recovery of SPY relative to IEF.
