The Interest Rate Environment
You expect falling interest rates ( Increase Duration)
Sell short bonds with higher nominal yields
Buy long term bonds with lower nominal yields
The rational is that falling rates is good for bond investors and you want to be invested in the bonds that will increase the most in price when rates change.
You expect rising interest rates (Reduce Duration)
Sell long term bonds with lower nominal yields
Buy short bonds with higher nominal yields
The rational is that rising rates is bad for bonds and you want to be invested in the bonds that will decrease the least in price when rates change
Credit Risk and the Economy
You expect the economy to strengthen
Sell Treasuries or something similar and buy corporates
The rational is that corporate bonds will perform better in a good economy than Treasuries
You expect the economy to weaken
Sell Corporates buy Treasuries
The rational is that Treasuries will perform better than corporates in a weak economy