By Michael Msika, Bloomberg Markets Live reporter and strategist
The start of rate cuts on both sides of the Atlantic last year failed to trigger a rally in small caps. Now rising yields threaten to further delay the upturn.
The sector continues to underperform larger peers this year as bond yields climb higher and traders trim bets on interest rate cuts. Meanwhile, economic growth is expected to stay subdued in 2025 — especially in Europe — deterring investors from buying the dip and creating another blow for small caps, which typically carry higher credit risk.
