Russell 2000 (IWM) vs 10Y Treasury Yield
IWM (iShares Russell 2000 ETF) tracks 2000 small-cap US stocks. April 2026 IWM approximately $245.
Also known as: Russell 2000 ETF (IWM) (ETF_IWM, Russell 2000, RUT) · 10Y Treasury Yield (10Y yield, 10 year treasury, TNX)
Why This Comparison Matters
IWM (iShares Russell 2000 ETF) tracks 2000 small-cap US stocks. April 2026 IWM approximately $245. 10Y yield 4.31 percent. Small-caps are highly sensitive to credit conditions because they typically have higher proportion of variable-rate debt and bank-loan financing vs investment-grade bonds for large-caps. Approximately 40 percent of Russell 2000 companies are unprofitable. Rising 10Y yields pressure IWM through tighter credit conditions and higher refinancing costs. The 2022-2023 period showed IWM severely underperforming SPY as rates rose, reflecting small-cap financial fragility. IWM/SPY ratio has compressed substantially in 2024-2026 reflecting AI capex narrative favoring large-caps.
The April 2026 Configuration
IWM approximately $245 (April 2026). 10Y yield 4.31 percent. IWM AUM approximately $60 billion. Russell 2000 includes 2000 smallest stocks ranked 1001-3000 by market cap.
IWM/SPY ratio approximately 0.346 ($245/$708). 12-month range 0.32-0.40. 5-year range 0.28-0.45. Historical norm 0.40-0.55 (Russell 2000 typically half SPY price). Compressed ratio reflects 2024-2026 AI capex narrative favoring large-caps.
Forty percent of Russell 2000 companies are unprofitable. Median profit margins much lower than SPY (~5% Russell 2000 vs ~12% S&P 500).
The combined April 2026 reading: small-caps underperforming despite Fed pause + AI capex narrative absent. Catalyst for IWM outperformance would require either: (1) Fed cut cycle resumption (small-cap credit benefit); (2) economic acceleration favoring cyclicals; (3) value rotation as AI capex narrative exhausts.
Why Small-Caps Are Most Credit-Sensitive
Russell 2000 companies have distinct rate sensitivity profile.
Financing structure: small-caps rely more on bank loans + variable-rate debt vs IG bonds. Approximately 40-50% of Russell 2000 debt is floating-rate vs ~10-15% S&P 500. Higher proportion of bank loans reset to SOFR/Fed funds quickly.
Profitability: 40% of Russell 2000 unprofitable. Cannot offset rising interest expense. Net debt service dominates earnings.
Refinancing risk: small-caps face more refinancing concentration. Maturity walls in 2024-2027 require rolling debt at higher rates. Interest expense rising sharply for small-caps as 2-3% pre-pandemic loans roll to 7-9% current rates.
Liquidity: smaller market caps mean less analyst coverage, lower trading volumes. Risk-off regimes hit small-caps disproportionately due to liquidity premium.
Empirical: 100bp 10Y rise typically associated with 5-10% IWM decline (60-90 day windows). Compare to SPY 5-8%. Small-cap rate sensitivity higher than SPY but offset by cyclical earnings sensitivity.
April 2026 setup: 10Y elevated at 4.31% pressuring small-cap interest expense. Refinancing concentrated in 2024-2027. Profitability concerns persist.
The IWM Underperformance Narrative
Conditional Forward Response (Tail Events)
How 10Y Treasury Yield has historically behaved in the 5 sessions following a top-decile or bottom-decile daily move in Russell 2000 ETF (IWM). Computed from 1,238 aligned daily observations ending .
Following these triggers, 10Y Treasury Yield rises 0.63% on average over the next 5 sessions, versus an unconditional baseline of +0.60%. 124 qualifying events; 10Y Treasury Yield closed positive in 56% of them.
90-Day Statistics
Explore Each Metric
Related Scenarios & Forecasts
Get daily macro analysis comparing key metrics delivered to your inbox. Stay ahead of market-moving divergences.
Frequently Asked Questions
What are IWM and the 10Y Treasury yield?+
IWM (iShares Russell 2000 ETF) tracks 2000 small-cap US stocks. April 2026 IWM ~$245; AUM ~$60B. Russell 2000 includes 2000 smallest stocks ranked 1001-3000 by market cap. Reconstitution annual (June). Median market cap ~$1.5B. 10Y Treasury yield 4.31% April 2026. IWM/SPY ratio ~0.346 ($245/$708; 12-mo range 0.32-0.40; 5-yr 0.28-0.45; historical norm 0.40-0.55). Compressed reflects 2024-2026 AI capex narrative favoring large-caps. ~40% of Russell 2000 companies unprofitable. Median profit margins much lower than SPY (~5% Russell 2000 vs ~12% S&P 500). Sectors: financials ~17%, healthcare ~16%, industrials ~15%, technology ~14%.
Why are small-caps most credit-sensitive?+
Russell 2000 companies have distinct rate sensitivity profile. Financing structure: small-caps rely more on bank loans + variable-rate debt vs IG bonds. ~40-50% of Russell 2000 debt floating-rate vs ~10-15% S&P 500. Higher proportion bank loans reset to SOFR/Fed funds quickly. Profitability: 40% Russell 2000 unprofitable. Cannot offset rising interest expense. Refinancing risk: maturity walls 2024-2027 require rolling debt at higher rates. Interest expense rising sharply as 2-3% pre-pandemic loans roll to 7-9% current rates. Liquidity: smaller caps less analyst coverage, lower volumes. Risk-off hits disproportionately. Empirical: 100bp 10Y rise = 5-10% IWM decline (vs SPY 5-8%).
Why has IWM underperformed in 2024-2026?+
Multiple drivers. AI capex narrative dominance: Big Tech captured most equity gains. Russell 2000 limited AI exposure (no NVDA, MSFT, GOOGL). Profitability concerns: 40% Russell 2000 unprofitable. Rising interest expense compressing earnings. Fed pause: Fed paused at 3.50-3.75% (December 2024). Small-caps need Fed cut cycle for credit relief. Pause prolongs interest expense pressure. CRE concerns: regional banking + commercial real estate concerns affecting small-cap REITs and lenders. AI-related concentration risk: large-caps have AI capex tailwind. Fiscal trajectory: federal spending cuts/tariffs hit small-cap export-oriented and consumer-facing names. April 2026 IWM/SPY ratio at multi-year lows reflects multi-year underperformance.
Related Comparisons
Explore Across Convex
Data sourced from FRED, CoinGecko, CBOE, and other providers. This page is for informational purposes only and does not constitute financial advice. Past performance does not guarantee future results.