Goldman Sachs Says Carry Trades Should Keep Thriving Despite Yen Intervention

According to CNBC, Goldman Sachs said relative value carry strategies should continue to perform well even as the impact of intervention on the Japanese yen appears to be fading. Strategists led by Kamakshya Trivedi said small but unusual U.S. intervention in the yen and Treasury markets has shown a clear preference for supporting other assets, and added that this raises questions about whether even more extreme measures that could weigh on the dollar may be considered if harder fiscal and monetary tightening steps are avoided. Goldman said carry is on track for its best year in data going back to 2010, based on performance through August, and noted resilience despite recent yen intervention and the U.S. Treasury's buyback announcement. The bank said global economic conditions remain supportive for further carry gains and added that Europe could come into focus if geopolitical tensions and energy prices rise again as traders approach a critical period for gas storage. Goldman also said EUR/USD has given back some of last week's sharp spot gains, while a positive skew in options pricing remains and could be tested if gas flows stay constrained.