You must have deep pockets. I presume you are saying that even if the trade goes against you (starting at current levels), you will continue to short bonds.
I think Ben made it pretty clear that they would just hold to maturity, so it should be a pretty orderly retreat.
Yea well I mean in general with regard to the current conditions... US doing better is a positive, so tapering off QE where everyone is worried it will kill us if they don't stop = good. I mean at least they aren't going cold turkey... could cause heart attacks. Of course this would be better if the whole market positioned for a drop on it.
I'm ok if it goes against me for a while, as I'm 99.9% sure it will eventually turn around (just look at any historical bond yield chart, or listen to e.g. Bill Gross and other experts) - yields have never been lower, and if they would continue going down further, that additional drop won't be of great magnitude anyway so I can handle it. We're just talking bonds here so price fluctuations are limited.
Inverse correlation of bonds to stocks is not as clean given QE and the unchartered territory we are in. Just like everyone keeps waiting for bond mkt to sell off thinking it will fuel equities. Both could very well sell off at same time.
In the short term, I think you are right, in the long term not. What would it take to scare off investors from BOTH stocks and treasuries? Probably another Lehman-scale event...
Btw, check http://www.milkeninstitute.org/events/gcprogram.taf?function=detail&EvID=3956&eventid=GC13 at 15:30.