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Praneet Shah

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  1. Goldman Sachs26 min

    How a popular trade collapsed — and why it matters

    Kamakshya Trivedi, Praneet Shah, Allison Nathan

    Following a surge to record speculative highs in 2024, the yen carry trade unraveled after the Bank of Japan's rate hike and expectations of US Federal Reserve cuts narrowed the critical yield differential. This reversal triggered a negative feedback loop of forced liquidations across global markets, affecting currencies from the Mexican peso to the Chinese renminbi, while distinct dynamics emerged between the rapid unwinding of hedge fund positions and the slower rebalancing of institutional portfolios. Despite the immediate volatility, economists anticipate the trade could regain relevance by mid-November if US economic data supports the restoration of attractive global yield spreads.