Goldman Sachs Names One Trade to Hedge an AI Market Shock

Goldman Sachs strategists said a short USD/JPY position—selling the dollar against the yen—is the most effective hedge against a broad artificial-intelligence shock or growth wobble. They argued the yen is a more attractive hedge for procyclical portfolios because Japan’s policy shift makes it less likely to weaken when global yields rise. The call followed an October tech selloff that pushed the Nikkei 225 to 62,693.16 on Oct. 23, about 14% below its 73,007 record; the index fell 2.65% on Oct. 22 while the yen rose 0.9% against the dollar as Treasury yields dropped. Goldman sees near-term yen weakness and prefers selling the euro against the yen, with December Bank of Japan and Federal Reserve decisions set to test its view.