What’s already apparent is that the US economy, aided by the massive stimulus programs –nearly $US5 trillion so far – is rebounding from the pandemic faster than anyone, including the Fed, expected. Analysts’ forecasts are for growth approaching 6 per cent this year, with some forecasts materially higher.

For the bond market hawks, that growth confirms their conviction that there will be a surge in inflation beyond the 2 per cent, on average, that the Fed is comfortable with. They are convinced a break-out in inflation will force the Fed’s hand and shatter its current conviction that it won’t have to raise rates until at least 2024.

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The doves – the Fed among them – believe that any increase in the inflation rate will be transitory, a function of the recovery from a low pandemic-impacted base, temporary supply chain disruptions and a passing boom in consumer spending financed by the stimulus cheques that the Trump and Biden administrations handed out.

The question of which argument is right matters, not just to sharemarket investors – sharemarkets around the world are trading at levels inflated by a presumption that the Fed and its central bank peers will maintain ultra-low rates indefinitely – but households and companies who are budgeting and adding debt on that same assumption that rates will remain “lower for longer.”

The Treasury auctions provide a market-based test of the rival arguments. Will there be sufficient demand to absorb what will be a continuing deluge of supply – particularly if Joe Biden can get his proposed $US2.25 trillion infrastructure spending plan through Congress – and minimise any impact on US bond yields?

At face value, with government bond yields in Japan and Europe either near or below zero (Australia’s 10-year bond rate is an outlier, at 1.8 per cent) the yields on offer ought to be attractive.

The foreign investment in US Treasuries that the US has traditionally relied on to maintain interest rates lower than they might otherwise have been has, however, been fading for some years.

A decade ago foreign ownership accounted for more than 40 per cent of the US bond market, today it is less than 30 per cent and sliding, with recent selling sparked by the losses in February as yields began rising.

The market was underpinned historically by Asian buyers, whose exporters sell mainly in US dollars, the global currency for trade, but need their local currency to pay their employees and for their other business inputs.

To avoid their sales of dollars depressing it, and hardening their own currencies, their central banks buy dollar assets, the safest and most plentiful of which - in the deepest, most liquid financial market in the world - is US Treasuries.

China and Japan, with big trade surpluses with the US, are the largest foreign owners of US Treasuries, each owning more than $US1 trillion of US bonds, although China’s holdings, at $US1.09 trillion, are lower than their peak of $US1.32 trillion in 2013 and it has been overtaken by Japan ($US1.28 trillion) as the largest foreign owner of US government debt.

China is unlikely to dump any of its US bond holdings – it would incur massive losses and it needs to maintain US dollar exposures to prevent the yuan from strengthening and undermining its export competitiveness – but that doesn’t mean it will actively support the funding of Biden administration strategies designed with competition with China in mind.

The scale of the US funding needs and the implications for the US of meaningful rate rises in the context of soaring government, corporate and household leverage makes it likely the Fed would push back against any significant market-inspired rise in US rates.

Yield curve control – targeting longer-term rates for a new and expanded version of its quantitative easing – might yet be rolled out in the US if the pressure for rate rises becomes intense, although that could create some awkward and difficult moments for the Fed if the hawks seem to be on the right side of the argument and entrenched inflation appears to be breaking out for the first time in decades.

This month’s bond sales could provide one of those moments.