A part of me struggling to understand the handwringing for buy-and-hold investors.
If you have a say 50/50 allocation between stocks and bonds, why would you not just rebalance? Take-advantage of the cheapness?
I get it with trend-following or trading strategies, which I like, but don't long-term investors need to accept that some years will be worse than others, no matter what the asset class?
I saw DODIX mentioned.
Let's say by end of year, it's -9%. About its worst MAXDD. Don't two +9's get remembered, as in 2019 and 2020?
Here are calendar year returns going back to 1990:
Year Count: 32
Worst Year: -2.9
Best Year: 20.2
Average Year: 6.4
Sigma Year: 5.5
YTD (thru 3/24): -5.6
2021: -0.9
2020: 9.4
2019: 9.7
2018: -0.3
2017: 4.4
2016: 5.6
2015: -0.6
2014: 5.5
2013: 0.6
2012: 7.9
2011: 4.8
2010: 7.2
2009: 16.1
2008: -0.3
2007: 4.7
2006: 5.3
2005: 2
2004: 3.6
2003: 6
2002: 10.7
2001: 10.3
2000: 10.7
1999: -0.8
1998: 8.1
1997: 10
1996: 3.6
1995: 20.2
1994: -2.9
1993: 11.4
1992: 7.8
1991: 18.1
1990: 7.4
Granted, all during secular bond bull. But there were certainly some periods in there of rising rates, if not with concurrent inflation.
Also, if there is sufficient liquidity, and there seems to be, why is selling a bond or TBill early bad? Can't you just pick-up another with the reduced principal but higher interest for the remainder of the planned term? Don't you end up in same place, less trading fee/bid spread?
Now if liquidity is crashing, I get it (e.g., IOFIX in March 2020, I do remember and will never forget). Is that what the concern is for investors ... that there will not be enough liquidity with everybody running for the door in bond fund land, perhaps including the Fed?

Federal funds rates do not reflect the real interest rates changes his year. Treasury yields have gone up much more in the shorter maturities than longer.
Last three month changes
6 mo treasury up 0.78%
1 year 1.2%
2 year 1.4%
5 year 1.1%
30 year 0.6%
15 year mortgage rates have risen even more:1.5% and 30 year rates about 1.6%.
DODIX has a duration of 4.7 per M* so you would expect it to drop 4.7% for every 1 % increase, or 5.2% based on treasuries or up to 7% based on mortgages.
It is down 5.5% YTD per M*
These changes are also in line with short duration funds like VUSFX ( duration of 0.98) which is down 1%.
If you use bond funds for income, you are now going to get more, although it will be a while before it makes up for the drop in NAV.
If you use bond mutual funds for portfolio balancing and diversification, it may be a difficult time, because if interest rates continue to rise, NAVs will continue to fall, and this may occur just at the same time stocks fall too, if the war gets worse or there is a recession. This is not how "bonds as ballast" is supposed to work.
An alternative is to look at individual bonds, where ( without a default) you are guaranteed the YTW return and to get your capital back. High rated 5 to 7 year corporates are yielding 2.5 to 3%. If inflation continues to increase, you will still loose money as the coupon rate will not increase, but you will get your principal back (of course it looses some purchasing power).
There are also fixed term ETFs where all the bonds mature about the same time and the ETF terminates at the end of a specific year. You can set up a ladder with equal amounts in each year and roll this years redemption into an ETF on the top of the ladder. This is simpler than individual bonds, provides diversification and has a low expense ratio (0.18% for BSCM the 2022 Invesco product)
ishares and Invesco both have lots of these available for corporate munis emerging market and high yield.
https://www.kiplinger.com/investing/bonds/601759/build-a-bond-ladder

So what exactly are those of you who are out of bond funds or considering dumping your bond funds going to do with the cash or proceeds of same?

``It's unclear what the neutral rate is,” Vataru says. ``It's a slightly untethered market.”