I heard him say that the Fed is still vigilant about inflation. I heard him say that the risks of both inflation and economic slowdown are higher. That sounds like both more uncertainty or stagflation. Neither one of these is good for bonds. I'll keep my short position. And if if stagflation, a combination of both a slow economy and rising prices, rears its ugly head, I'll be really glad to have those bond shorts (bets that interest rates will rise) to protect my equity portfolio.
If I couldn't hedge rising interest rates with futures (and I got a rebate on shorts stock positions), I would also play this with the iShares Lehman 20 Yr Government Bond Index ETF (NYSEARCA:TLT) ($88.51). If I have to be in bonds for income and safety but was worried about inflation I'd own iShares Lehman TIPS ETF (NYSEARCA:TIP) ($101.15). Oh wait, I do own them - I love that yield over 6% and all I have to worry about is inflation falling to hurt my yield. A rise in long term interest rates will hurt the price of TIP in the short run but not as much as the TLT.
Disclosures and Confessions: I am short both Ten Year Treasury Futures ZNM7, and Long Bond Treasury Futures ZBM7. I do not own TLT. TIP is my largest discretionary position (accumulated over the past year, my cost is below current levels at $99.45).