The Carry Trade Is Back and Bigger Than Ever, Goldman Says
Goldman Sachs says the currency carry trade has roared back to multi-year highs after its brutal 2024 blowup.
The carry trade — that classic hedge-fund move where you borrow cheap in low-rate currencies and park the cash in high-yielders — is back in a big way. Goldman Sachs is flagging that the strategy has climbed to levels not seen in years, despite blowing up spectacularly in 2024 and rattling global markets in the process.
If you weren't watching in 2024, that blowup was ugly. The trade unraveled fast when the Bank of Japan surprised markets with a rate hike, torching positions funded in yen and sending shockwaves from Tokyo to Wall Street. It was a reminder that carry trades don't die quietly — they explode.
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So why is everyone piling back in? Simple: the yield differentials are still attractive. As long as interest rate gaps between countries remain wide, the carry trade keeps printing — until it doesn't. That's the double-edged sword you're signing up for. The strategy works steadily for months, then gives back everything in days.
For retail traders, the resurrection of this trade matters beyond forex desks. When the carry trade is alive and crowded, it introduces a hidden fragility into broader markets. Any sudden policy shift — especially from the Bank of Japan — could trigger another violent unwind, hitting equities, volatility products, and risk assets hard and fast.
Watch the yen. Watch BOJ headlines. Goldman's signal that this trade is back at scale means the 2024 playbook is very much worth keeping on your desk. Continue reading at MarketWatch.com.
