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iShares 3-7 Year Treasury Bond ETF As A Hedge Against Volatility

 


Recent market headlines have turned more risk-off following Trump’s announcement of an extra 100% tariff on Chinese imports and new export controls on critical software, which jolted equity markets globally — particularly the S&P 500, which dropped 2.7%, breaking short-term structure. In periods of equity volatility, short-to-intermediate duration Treasuries (like IEI) tend to outperform due to flight-to-safety flows.

IEI Duration Profile: 3–7 years maturity, which makes it less sensitive to rate volatility than long-dated Treasuries (like TLT) but still offers negative correlation to risk assets during equity drawdowns.

Current Environment: Fed rate cut expectations have firmed amid tariff and growth concerns, further supporting Treasury prices. Futures markets are pricing in a 98% probability of a 25bps Fed rate cut at the upcoming FOMC, which provides a tailwind to mid-duration bonds.

iShares 3-7 Year Treasury Bond ETF (IEI:US) has technically broken out of a short consolidation base within a rising channel, supported by macro tailwinds of Fed easing expectations and a shift to risk-off sentiment following tariff headlines. As equity markets correct, IEI offers a liquid, lower-duration hedge to cushion portfolios.

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