Fed wants to suck out liquidity while the treasury wants to issue debt at lower rates. But hedge funds are net short USTs. Hold steady?

See title. The fed and treasury do not want to see treasury market disfunction, or else the fed would not have intervened as they have over the past few years. and the treasury does not want to issue massive amounts of issuances into a void of no buyers. Seems like this unspoken mandate is in conflict of the dual mandate of fighting inflation through sucking out liquidity and max employment. Here is one way they can fix it: It seems like some market participants are finally beginning to buy a “higher for longer” narrative and therefore they can get rugged.

Just look at Ackman publicly say he is shorting the hell out of bonds. You have to have a “higher for longer” mindset to do that. They must pay margin. If they use enough leverage, they cannot afford to let this trade go against them. UST liquidity may be thinning out too with bond prices being smacked around and the yield curve inverting so much for so long. If hedge funds are huge net short treasuries, a holding steady of the fed combined with panic that forces a slight move to safety (bad stuff happens all the time) could squeeze those hedge funds massively, allowing the treasury to roll over their debt to domestic buyers into a real “mother of all short squeezes”. This could lead to a crash in equities without a crash in real estate or a crash in the real economy but with the positive effect of treasury issuances not spiking yields to infinity and mass unemployment. Win-win for everyone except those who literally bet against America. Powell could have his cake of growth and suck out liquidity (through all the treasury issuances) while the treasury eats the cake too. Foreigners aren’t buying USTs anymore so we must get domestic buyers to step in. Those hedge funds could be the big money that buys.

Anybody else seeing the impasse between the fed and the treasury’s conflicting duties being resolved in this way?

FWIW, I don’t see this as some galaxy brain move by Powell and Yellen. Just a path of how market mechanisms can work to quickly unwind things here and get from point A to point B.