Goldman Sachs Urges 12% YTD Carry-Trade with Yen-Funded Commodity Currencies
Goldman Sachs strategists are recommending carry trades funded by yen borrowing to buy a basket of commodity currencies that has delivered about 12% returns year-to-date. A collapse in FX, bond and equity volatility following Middle East ceasefire developments has bolstered market confidence in yield-seeking strategies.
1. Strategy Performance
The yen-funded carry-trade basket—comprising the Brazilian real, Colombian peso and Turkish lira—has posted roughly 12% returns so far in 2026, marking its best annual start in three years as commodity-linked currencies rallied on higher oil prices.
2. Volatility Decline
Volatility across currencies, bonds and equities has collapsed after reported Middle East ceasefire progress, providing investors with confidence that exchange rates will remain stable and preventing abrupt swings that hampered these trades in 2024.
3. Goldman Sachs Recommendations
Goldman Sachs strategists are advising clients to allocate to an equally weighted basket of emerging-market currencies funded by yen borrowing, aligning with similar calls from Citigroup and RBC to capitalize on the low-volatility environment.