Astrid Stawiarz/Getty Images
According to Bloomberg disclosures, Michael Burry holds a short position in the US Treasury market for $280 million.
Burry's Scion Asset Management increased its hold of put options on the iShares Treasury Bond ETF 20+ Years.
As yields rise, bond prices fall. Therefore, any rate hikes could give Burry a huge win.
Subscribe to our daily newsletter 10 Things Before The Opening Bell.
Bloomberg first reports that Michael Burry holds a $280 million short position in the US Treasury market. This position could balloon further if interest rate rises.
According to SEC disclosures, Burry's Scion Asset Management increased its put options on the iShares20+ Year Treasury Bond ETF to $280 Million from $172,000,000 three months ago.
As yields rise, bond prices fall, and any rate increases by the US Federal Reserve will push down Treasury prices. This should give Burry a win on his bearish bet. Some investors think that elevated inflation, thanks in part to supply-chain bottlenecks and labor shortages, could force the Fed's hand, leading to earlier-than-expected rate increases.
Burry warned markets in a series tweets in June that they were facing the "Greatest Speculative Boom in All Time" Burry had predicted an increase in inflation earlier in the year. He compared it to the 1920s German hyperinflation of the Weimar Republic. Burry discouraged investors from purchasing gold and bitcoin by stating that governments would likely "squash both" the assets.
Burry must profit from a trend reversal as bond yields have been falling steadily over the past months. His pessimistic outlook is in line with Wall Street sentiment. A Bloomberg survey found that the median 10-year Treasury end-of-year forecast is 1.6%. This is up from 1.26% at 10:04 a.m. ET Monday
Burry's contrarian bet against US housing markets in the lead-up to the crash of 2007-08 earned him national fame in movies and books such as "The Big Short." Burry, a pessimist by nature, used Twitter to go by the name "Cassandra" in reference to the mythological priestess that accurately predicts doom and is never ignored.