At the beginning of act 3, scene 1, Salarino and Solanio discuss the rumor that Antonio's ship, the Rialto, "wrecked on the narrow seas." Both of them hope that this a false rumor.
When they run into Shylock on the street, they try to find out what he knows about it. He is preoccupied with the elopement of his daughter, Jessica, but says he has heard of the loss of the Rialto. Shylock then mentions how smug Antonio has always been, how he has insulted Shylock by calling him an usurer, and how he has undercut Shylock's ability to make a living by lending to other Christians without charging interest. Shylock says three times that Antonio should "look to his bond." By this he means that Antonio should be concerned about the agreement he made to give Shylock a pound of his flesh if he could not repay his loan.
Salarino and Solanio say to Shylock that surely he wouldn't demand Antonio's flesh, asking what he could possibly do with it. Shylock says he could use it for fish bait but then goes on to say that his real purpose is to exact revenge. This leads Shylock to a famous speech in which he expresses a heartfelt sense of injury at all the ways Antonio's words and acts of anti-Semitism have hurt and angered him.