Dollar-Hedging Character Leg
The cross-currency basis as the price of dollar insurance — a flow-based credibility vote on the dollar system that domestic rate instruments cannot see. RATE DNA credibility family: kawa_rate_pressure reads credibility in inflation expectations, sovereign_credibility in EU spreads, commodities_ballast in cross-asset returns; this leg reads it in global dollar-funding flows (BIS Shin 2025-10-23; Torman 2026-03-26). Production series is the derived 3M CIP basis from FX forwards + money-market rates (the vendor's direct quotes died 2021-12-31), validated against them over 2019-2021 (EUR corr 0.98, JPY corr 0.96). States: HEDGED / COMPLACENT / STRESSED / SCRAMBLING from the worst-of EUR/JPY/GBP stress z.
State History
State Definitions
COMPLACENT — dollar insurance abnormally cheap on every major channel (composite <= -1): nobody is buying the hedge; Shin's pre-stress state.
SCRAMBLING — the world is paying up for dollar insurance (composite >= +2, or >= +1 with a blowing-out flow signature).
HEDGED — dollar insurance priced inside its pinned range (-1 < composite < +1).
STRESSED — insurance getting expensive (composite >= +1): offshore funding pressure building.
Sources
Read-only intelligence. Sensor states are diagnostic observations, not predictions.