Reeks of aged cotton duck
Joined: Oct 2007
Posts: 1,176
Likes: 7
From: Middle Georgia, USA
Bikes: 2008 Kogswell PR mkII, 1976 Raleigh Professional, 1996 Serotta Atlanta, 1984 Trek 520, 1979 Raleigh Comp GS
Looks like a casing failure to me. I quit using Maxxis road tires because I had several instances of this in brand new tires. The mounted tires looked fine until you pumped them up to riding pressures... then the casings would deform just like you're seeing.
I'd replace that tire.