Goldman Sachs has been among those reaping benefits from the ECB's bond-buying game plan and now the bank has booked profit from the rally on the euro-zone's debt market. Goldman initiated a trade going long an equally weighted basket of 5-year Irish, Italian and Spanish government bonds on June 29 at an average yield of 5.95%. The bank says in a note Friday that the yield is approaching the revised target of 4%, from an initial one of 4.5%. "We would now close the trade, with a potential period total return of around 10% (including carry)," it says. The bank argues that the risk-reward of this trade is in favor of a neutral position. "At these yield levels, the macro outlook takes the upper hand in determining expected returns," it says. "It will be key to see whether foreign funds flow back into the peripheral economies after the ECB's stabilization."
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