Goldman Sachs: Currency Carry Trade Roars Back After 2024 Blowup
The carry trade is back and larger than it's been in years, Goldman Sachs warns — the same strategy that torched markets in 2024.
The carry trade is back, and Goldman Sachs says it's bigger than it's been in years. That's the same crowded hedge-fund bet that helped trigger a massive market blowup in 2024 — so if you're not paying attention, you should be.
The carry trade works like this: borrow cheap in a low-interest-rate currency, park the money in a higher-yielding one, and pocket the spread. It sounds boring until it unwinds violently. When everyone rushes for the exit at once, the move is savage and fast — exactly what happened in 2024 when the trade collapsed and sent shockwaves through global markets.
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Goldman's warning matters because positioning, not fundamentals, drives the pain when carry trades blow up. The bigger the trade gets, the more violent the unwind. Right now, the trade is swelling again — which means the risk is building in the background even if markets look calm on the surface.
For retail traders, this is a flashing yellow light. Carry-trade blowups don't stay contained in currency markets. They spill into equities, commodities, and credit — fast. Volatility can spike seemingly out of nowhere, and leveraged positions get crushed before most people even know what hit them.
Keep your eye on funding currencies like the Japanese yen and the Swiss franc. A sharp move higher in either one is often the first signal that the carry trade is starting to crack. Continue reading at MarketWatch.com
