ETFs When Interest Rates Rise: Bonds Fell, Most Shares Rose

In 2022, the interest rate the US government pays to borrow for ten years (the 10-year Treasury yield) rose 2.36 percentage points. Ten of the 12 exchange-traded funds (ETFs, funds that trade like shares) we tested lost money. The exceptions were an energy ETF and a utilities ETF.

That year was harsher than the long record. Across the 244 months from July 2006 to October 2026, eight of the nine share ETFs gained in more than half of the months when the yield rose 0.25 percentage points or more. Both Treasury bond ETFs fell in every one of them.

Interest rates in this article means the 10-year Treasury yield.

A Treasury is a bond the US government sells to borrow money.

The yield is the annual return a buyer earns by buying the bond at today's price and holding it to the end. It moves every day as bond prices change. Our explainer on bond prices and yields covers why price and yield move in opposite directions.

We took the last yield of each month from the Board of Governors of the Federal Reserve System, from June 2006 to October 2026. A percentage point is one unit of that rate, so a yield of 3.88% sits 2.36 points above 1.52%.

Across the 244 monthly changes, the yield rose in 122. It fell in 117 and stayed level in 5.

An ETF is a fund that trades on an exchange like a share and holds a basket of assets. Our explainer on ETFs covers the basics. The table shows the twelve ETFs, what each holds according to its issuer's page, and how many monthly changes we tested.

Monthly changes run from July 2006 to October 2026, or from November 2015 for XLRE. Source: each ETF issuer's own fund page, read 11 November 2026

Eleven ETFs have 244 monthly changes and XLRE has 132.

All returns count dividends. Each month runs from one month-end close to the next. XLRE did not exist until October 2015, so its figures come from a shorter window and do not compare directly with the other eleven.

The two Treasury bond ETFs moved against the yield in most months. Across all 122 months when the yield rose at all, TLT fell in 107 and IEF in 111. In every large rise, both fell.

The correlation of TLT (the ETF of Treasury bonds with over 20 years left) with the monthly change in the yield was -0.94. For IEF (the 7 to 10 year Treasury ETF) it was -0.99.

A correlation runs from -1 to +1. A value of -1 means two series always move in opposite directions, 0 means no pattern, and +1 means they move together.

In the 35 months when the yield rose 0.25 points or more, TLT and IEF fell in all 35. In the 38 months when it fell 0.25 points or more, both rose in all 38. The median monthly move in TLT was -5.24% in rise months and +5.82% in fall months.

The iShares pages report a duration of 14.83 years for TLT and 6.81 years for IEF, as of 10 November 2026. Duration estimates how far a bond fund's price moves for each 1 point change in yields. In our monthly data, TLT lost about 15% for each 1 point rise in the yield, and IEF about 7.6%.

The median monthly return of each ETF is split into two kinds of month. One is a month when the yield rose 0.25 points or more, which happened 35 times. The other is a month when it fell 0.25 points or more, which happened 38 times. The median is the middle month when all are ranked.

Seven share ETFs had a higher median in rise months than in fall months: SPY, QQQ (the Nasdaq-100 ETF), IWM (the small-company ETF), XLK (technology), XLF (financials), KRE (regional banks), and XLE (energy).

SPY gained a median 1.91% in rise months and lost 1.82% in fall months. It rose in 21 of the 35 rise months and in 12 of the 38 fall months.

Most share ETFs did better in rise months than in fall months, but even SPY lost money in 14 of the 35 rise months. XLRE, with a shorter record, was the one share ETF that rose in fewer than half its rise months: 6 of 20.

The energy ETF had the highest median in rise months, at 2.98%, and rose in 24 of the 35. Gold, the real estate ETF, and both Treasury ETFs had negative medians. The utilities ETF was slightly positive, at 0.53%, but gained more in fall months, at 2.03%.

Next, we measured the correlation of each ETF's monthly return with the monthly change in the yield, over the same months.

For the nine share ETFs, the values run from -0.43 to +0.25. The real estate ETF is lowest at -0.43. The energy ETF is highest at 0.25. SPY is at 0.08, so the yield explains almost none of its monthly moves. Gold stands at -0.33.

The yield and the share ETFs moved together only loosely.

Correlation is not causation. The data shows what moved together, not why.

In 2022, the yield rose 2.36 points. The Fed's policy rate, the Effective Federal Funds Rate (the rate banks pay each other overnight), rose from 0.07% to 4.33% over the same year. Our review of the 2022 Fed rate hikes covers that.

In 2022, ten ETFs lost money. QQQ, the Nasdaq-100 ETF, fell 32.6%, TLT fell 31.2%, XLK fell 27.7%, and XLRE fell 26.2%. SPY fell 18.2% and IEF 15.2%. Gold lost 0.8%.

The energy ETF rose 64.2%. The utilities ETF rose 1.4%. We did not test why. From July 2006 to October 2026, the largest monthly rise in the yield was 0.68 points in September 2022, from 3.15% to 3.83%. That month, SPY fell 9.24% and TLT fell 8.23%.

The yield rose in 9 of the 12 months of 2022.

The test uses 12 ETFs, one yield, and monthly data. A different yield or a different window could give different figures. A month is also a coarse unit.

An ETF's holdings change over time. The test describes the funds as they traded. The yield series runs to 9 November 2026, while the monthly changes end with October 2026, the last full month.

Our guide to how ETFs perform in a crisis covers other stress periods. Readers can follow six of these ETFs in our Multi-model Signals, which include SPY, QQQ, IWM, TLT, IEF, and GLD.

In short, 244 months of data show Treasury bond ETFs falling in every month the 10-year yield rose 0.25 points or more, while share ETFs gained in most of those months, but not in all of them. We wrote this on 11 November 2026, with price data to 10 November 2026.

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This explainer is part of the YX Insights Academy. Each one takes a single idea and checks it against real data.

The same approach runs through everything else we publish:

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Bond ETFs did, but share ETFs often rose. Across 244 months since 2006, the Treasury bond ETFs TLT and IEF fell in every one of the 35 months when the 10-year yield rose 0.25 points or more. SPY, the S&P 500 ETF, gained in 21 of the same 35 months.

The energy ETF XLE had the highest median return in months when the 10-year yield rose 0.25 points or more, at 2.98%. The financials ETF XLF followed at 2.40%, then SPY at 1.91%. The test covers 35 such months from July 2006 to October 2026, while a median describes only the middle month.

Ten of the 12 ETFs we tested fell in 2022, when the 10-year yield rose from 1.52% to 3.88%. QQQ (the Nasdaq-100 ETF) fell 32.6%, TLT (long-term Treasury bonds) 31.2%, and SPY 18.2%. The energy ETF XLE rose 64.2% and the utilities ETF XLU rose 1.4%.

Not in every month, but in every large one in our data. TLT and IEF fell in all 35 months when the 10-year yield rose 0.25 points or more. Across all 122 months of any rise, TLT fell in 107 and IEF in 111. Our explainer on bond prices and yields covers why.

DISCLAIMER: This article is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.