Why I Shorted Bonds, Not Stocks: A Sticky-Inflation Bet

I Sold Bonds, Not Stocks

Let me be clear up front: the thing I bet against is not the S&P 500 — it's bonds.

When I mentioned yesterday that I was taking some bearish positions, a lot of people assumed I was shorting the stock market. I'm not. I've said for a long time that I'm not a fan of shorting stocks, because fading a relentlessly rising index is a genuinely tricky trade. Instead, I went short TLT, the 20-plus year Treasury bond ETF.

The Core Logic: Inflation Got Sticky Again

My thesis starts with one observation — inflation is printing hotter than expected.

The Producer Price Index came in at 6% versus 4.9% expected, a big upside surprise. CPI landed at 3.8% against 3.7% forecast. Both read to me like inflation getting embedded back into the system, and the 2-year yield is pointing the same way.

I think this persists for a while, and the key variable is oil. As long as Middle East headlines keep flip-flopping between "the war is ending" and "we will retaliate," oil stays elevated — and as long as oil stays elevated, inflation stays sticky. Oil price can only fall so far from here, in my view.

The Actual Position and Stop

I shorted TLT this morning as it retested a resistance area.

If inflation drives yields higher, bond prices theoretically fall. So my stop is clearly defined: just above the May 7 high, which is my resistance line. If TLT keeps rallying through that level, I cut the trade and take the loss — a controlled size relative to my portfolio.

What's interesting is that I have no take-profit on this idea. Instead, once price breaks through prior lows, I plan to use a 4-hour chart to trail my initial stop into profit and repeat that as long as price keeps agreeing with my bias. I'll ride it down for as long as the trend cooperates.

I actually shorted bonds before, covered as price moved higher, and I'm now re-entering for another swing lower.

The Data Agrees

This isn't just a chart that looks good.

On my scorecard, the US 10-year is getting bearish readings across the board: -3 on fundamentals, -2 on positioning (COT), and -1 on technicals. The COT piece matters most — institutions made a big downward shift in their bond positioning and now carry heavy short exposure on an absolute basis. The institutions are already selling bonds.

Where I Could Be Wrong

The most dangerous thing in trading is excessive certainty.

Whenever I take a position, I'm never fully convinced I know what happens next. I'm making an educated guess. If the Middle East conflict genuinely resolves, if oil falls fast, or if the central bank turns out more dovish than expected, this trade is wrong. That's exactly why a stop loss and an open mind are non-negotiable.

To be clear, this is not financial advice — it's me being transparent about what I'm personally doing and why. I keep a core rule on this channel: no only-show-the-winners nonsense. When I'm wrong, I log it too.