Crispin Odey’s hedge fund has reportedly made a killing on the back of short positions against British government bonds.
The prominent Brexiteer, whose eponymous firm Odey Asset Management manages £4 billion in assets, believes higher inflation is here to stay and central banks will need to raise rates faster, according to sources.
His fund’s largest notional exposure is betting against very long dated bonds, some as far out as 2071.
Odey had entered into a short position against UK 2061 cash bonds when yields were as low as 0.5 per cent.
Most of the firm’s long positions are in inflation-linked bonds that climb when price rises accelerate.
The pound and London stock market plunged in what one analyst called “the worst day I have ever seen” after the Chancellor revealed his mini-budget on Friday.
Sterling repeatedly fell to new 37-year lows against the dollar during the day, slowly edging towards its all-time trough.
At its lowest point on Friday afternoon £1 could buy just 1.0896 dollars – the worst exchange rate for Britons since 1985.
The yield on 10-year gilts rocketed to hit 3.7 per cent, surging from 3.2 per cent on Tuesday as investors demanded more return for the greater risk they were taking by buying Government debt.
One expert said: “Britain is now trading like a developing country, where perceived fiscal irresponsibility is undermining confidence in the value of its currency.”
Related: Truss backers make ‘small fortune’ betting against the British economy
