Russell 2000 Is a ‘Certified Train Wreck’ as Treasury Yields Plummet (Who Warned You?)

Takeaway: Hedgeye called the move in Treasuries and small caps.

The Russell 2000 is a certified train wreck down double-digits (-10.2%) from where we called it the all-time #bubble high in small cap illiquidity.


Russell 2000 Is a ‘Certified Train Wreck’ as Treasury Yields Plummet (Who Warned You?) - 10.02.14 TLT vs. Russell 2000


Meanwhile, overall market volume continues to accelerate on the down days (Total Equity Market Volume was up +25.7% yesterday vs. 3 month average on the -1.5% sell-off in the Russell 2000). Don’t underestimate how hard it is for funds to get out of some of these exposures.

Meanwhile, we’ve remained long the Long Bond (in TLT terms), despite Old Wall consensus saying otherwise. It's up over 18% YTD. Yields can, in fact, go a lot lower from here. There’s no long-term support for the UST 10YR Yield to 1.7%.

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