The Fed has succeeded in propping up the bond market (ie keeping interest rates low) long enough to get the infrastructure bill passed. Once the final Democrats dream- the $1.75T social spending bill- is either passed or scrapped, I believe political pressure on the Fed to keep printing the money declines. At that point the odds of a collapse of the bond market surges. Note the recent treasury auction described as a Bond Auction Disaster’ is a sign that the Fed’s ability to delay the interest rate surge is weakening.

How to play this?

My favorite way of playing that continues to either short or buy puts on the Eurodollar. I recently bought a bunch of June 2022 98.00 puts which are IMHO dirt cheap. It cost me $60- including commission- for each put. If that contract- currently 99.55 got down to 97.00- meaning short term rates got to 3%- then the put which cost me $60 would be worth $2500 and if it got to 4% interest then the put would be worth $5000…etc…

Big Bob the Bond Bear