'Big Short' investor Michael Burry is betting that interest rates are about to go up

• Michael Burry has a short position against the US Treasury market worth $280 million, according to disclosures first reported by Bloomberg.
• Burry's Scion Asset Management has upped its holdings of put options on the iShares 20+ Year Treasury Bond ETF.
• Bond prices fall as yields rise, so any potential rate hikes should give Burry a windfall on his bet.

Michael Burry has a short position against the US Treasury market worth $280 million, which stands to balloon further if interest rates rise, according to disclosures first reported by Bloomberg.

Burry's Scion Asset Management has upped its holdings of put options on the iShares 20+ Year Treasury Bond ETF, an index fund that tracks long-dated US government bonds, to $280 million from $172 million three months prior, according to the SEC disclosures.

Bond prices fall as yields rise, so any potential rate hikes by the US Federal Reserve should push down Treasury prices, giving Burry a windfall 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.

In June, Burry warned in a series of tweets that markets were facing the "Greatest Speculative Bubble of All Time in All Things." Earlier in the year, he predicted a sharp rise in inflation, drawing comparisons with Weimar Republic-level hyperinflation in 1920s Germany. Burry also dissuaded investors from buying gold or bitcoin, saying governments would likely "squash" both assets.

Bond yields have fallen steadily in recent months, requiring a trend reversal for Burry to profit. Yet his pessimistic view is not out of line with broader Wall Street sentiment. According to a Bloomberg survey, the median end-of-year forecast for 10-year Treasurys is 1.6%, up from 1.26% as of 10:04 a.m. ET on Monday.

Burry was made famous by his contrarian bet against the US housing market in the run-up to the 2007-08 crash, which earned him national prominence in movies and books like "The Big Short." Ever the pessimist, Burry's now-deleted Twitter account went by "Cassandra," in reference to the mythological priestess who accurately predicts doom but is always ignored.