Branch² Intelligence
A hedge-fund trade blamed for a massive market blowup in 2024 has made a big comeback, Goldman Sachs says
Key takeaway
Goldman Sachs reports a major comeback of the currency carry trade, reaching multi-year highs.
- Step 1Goldman Sachs reports carry trade comeback — leveraged FX positions increase.
- Step 2Higher leverage amplifies currency moves; low-yield currencies (yen, franc) weaken, high-yield ones strengthen.
- Step 3US SMEs with unhedged FX exposure face wider profit swings; hedging costs rise as volatility increases.
- Step 4If the trade reverses (risk-off), rapid unwinding causes sharp FX moves, potentially triggering margin calls and liquidity stress for leveraged SMEs.
Source: MarketWatch
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