Jim Rogers, the noted commodity bull, is shorting the 30-year U.S. government bonds and may consider shorting the 5 and 10-year bonds as well, he told CNBC on Monday.
Rogers says the Treasurys market is one of the few bubbles that he sees in the world today.
"I cannot imagine or conceive lending money to the United States government for 30-years at 3, 4, 5 or 6 percent —you pick a number — in U.S. dollars," he said.
But he acknowledges that Treasury prices could rally further, given growing uncertainties about a U.S. economic recovery. "There may be rallies, I may be forced to cover, I probably will cover somewhere along the line, but I'm short the bond and plan somewhere in the next week, month or year to short a lot of them."
Investors shorting Treasurys also run the risk of further intervention by the Federal Reserve, which as Rogers admits, may announce further quantitative easing to help the economy in the future. Such a move would push down yields.
But he says quantitative easing cannot go on forever. "Eventually, even the Fed is going to have to throw in the towel because they're turning themselves into bankruptcy as well."
Rogers also doesn’t think using credit default swaps (CDS) is a good way to bet against Treasurys because the U.S. is unlikely to default and will likely choose to inflate itself out of a debt crisis.
"If that happens, they haven't defaulted, I mean you're bankrupt if you own their bonds, but technically they haven't defaulted, so anybody buying a credit default swap hasn't gained anything," he said.
Buy Dollars Over Euros
Despite his bearish views on the U.S. economy, Rogers says he is long on both the dollar and the Euro, but for now is choosing to stock up on the dollar over the Euro.
"The U.S. dollar has been beaten down so much and there are so many bears, including me, that usually when that sort of thing happens, there's a rebound."
Rogers says he bought the Euro almost exactly a year ago at $1.20 and still owns it. The single currency currently trades at $1.45.