Bond liquidation wrecks small caps. Here's how bad some traders see it getting

While the S&P 500 powers through rising bond yields and higher crude oil prices, one section of the U.S. stock market is falling behind: small caps. At the start of the month, the Russel 2000 was up 20% year to date, beating both the S&P 500's 13% gain and the Nasdaq-100's 17% advance. But September has meant big pain for small caps, with the Russell 2000 now only up 14% year to date, versus respective returns of 20% and 12% for the S&P 500 and Nasdaq-100. The culprits seems clear: higher interest-rates and falling bond prices. The correlation between the iShares Russell 2000 ETF (IWM) and the 20+ Year Treasury Bond ETF (TLT) is currently 0.51, compared to 0.29 with the State Street SPDR S&P 500 ETF Trust (SPY) and 0.1 with the Invesco QQQ Trust .