I was going to say I find something puzzling about the bond market, but I think I've figured it out. Last year ended with the market expecting 2 rate hikes from the Fed (0.25% each). And now the market expects about 6, an increase of 1%. If you look at BND performance YTD, it's -6.8%. Given BND with a 6.8 duration, that's the exact loss you'd expect from a 1% rate hike.
https://www.morningstar.com/etfs/xnas/bnd/performance
Maybe keep shorting bond funds, in a defined-risk way. If the market expects only 1.5% in rate hikes this year, and NO rate hikes for the next 5.8 years, I'd suggest that is unreasonable.
The only way such an expectation could be fulfilled would be if.... a major disinflationary financial crisis occurred like a housing crash, crypto crash, stock crash, banking crisis due to bond market losses... Oh snap, that's exactly what the bond market is telling us will happen.
Two months ago, I can believe 1.75% was the expected Fed funds rate at year end. Now the market expects 3.25% ... yet even long-term treasuries are yielding less than 3.25%. Markets don't generally predict a yield curve inversion, and right now consensus is for no recession (I disagree). So if there's no yield inversion, then longer duration treasuries need to have higher yield (by definition).
So the Fed funds rate will go from 0.75% now to 3.25% in Dec 2022. The inconsistency is that US Treasuries yield 3% now, so they don't fit that expectation. I can short US treasuries and wait for their yields to rise from 3% to 4%, all while only expected events take place.
BTW, I didn't pick 3.25% myself - it's a figure I've heard repeated over and over on Bloomberg TV and CNBC. Nobody talks about 2023 December, only 2022 December. So I think the market is ignoring 2023 for now, and waiting for more information from the June & July FOMC meetings.
So while I do not recommend this to anyone else, I've got an inverse or short position in bonds. I believe in most scenarios that will be profitable. If inflation and the stock market collapse at the same moment, it's nearly certain that investment takes a big loss extremely quickly.