💱 USD/JPY, USD/CHF & 10Y Swap Spread: Fractures in the Global Collateral Vein

The 10-year swap spread is perhaps the most organic and telling signal the market can offer.

It remains pinned at –28.4 basis points.

It’s the heartbeat of the base layer of the entire financial system—the silent readout of how much real love, trust, and confidence the market has in the very collateral that holds the entire system together: U.S. Treasuries…

…two of the most important currency pairs on Earth, are both making decisive, directionally opposite moves that tell the same story through different lenses.

• USD/JPY has reversed sharply back below 144 — the unwind of the global leverage machine. The carry trade that powered trillions is going in reverse.

• USD/CHF hit another low .7981 — the oldest, most conservative capital in the world is slipping away from dollars… not with panic, but with purpose.

On the surface, these are opposite trades.
But beneath the surface, they converge on the same truth:

And together with the deeply negative 10-year swap spread, they form a triangulation of global liquidity strain that no one dares say out loud:

📡 Sovereign Signal Table – June 26, 2025

🇨🇭 USD/CHF: The Strongest, Most Conservative Capital in the World Is Speaking

• The Swiss franc is where capital flees when it wants to disappear quietly.

• A move in USD/CHF from parity to 0.7992 isn’t just about FX—it’s a sovereign vote.

• This is conservative capital exiting dollars—a reallocation of reserves from yield-seeking to safety-seeking.

• Switzerland is:

  • 🏦 A neutral banking jurisdiction

  • 🧊 A cold storage vault for generational capital

  • 🚫 Averse to debt monetization and geopolitical entanglement

This drop in USD/CHF is a scarcity signal.

It suggests that true safe haven capital may be already exiting the global dollar structure, well ahead of headlines.

🇯🇵 USD/JPY: The Most Leveraged Capital in the World Peaked—and Is Now Reversing

The yen carry trade has long been one of the global financial system’s most potent—yet least acknowledged—liquidity engines.

But it was only in the last few years, post-2021, that it went parabolic.

With the Bank of Japan holding firm at ultra-low interest rates while the Fed hiked aggressively, the trade became irresistible:
Borrow in yen at 0%, buy U.S. assets at 5%.

That divergence sent USD/JPY surging—from ~102 in early 2021 to a blow-off peak of 162 in July 2024.

This was not a normal cycle—it was a historical distortion, and it fueled massive flows into dollar-based risk globally.

But now?

• The pair has failed to reclaim its highs

• It’s broken key support, now at 143.92

• And the monthly chart confirms what the flows are saying:
  → The peak of the carry trade may be behind us

At the same time, USD/CHF plunging below 0.80 tells us where the money is now headed:
→ Out of leverage, and into sanctuary.

Together, these moves signal not just caution—but a reorientation of capital itself.

🧠 The Real Signal: Capital Is Sorting Itself—And the Dollar’s Recalibration Is Part of the Plan

Together, the surge in the Swiss franc, the rally in the yen, and the decline in DXY are not random.

They are a global reallocation of capital—one that separates the liquidity-dependent from the credibility-secure.

And anchoring it all: the 10-year swap spread, still deeply negative at -28.4 bps.

A pure, organic readout on how much the world truly values the base layer of the financial system—U.S. Treasuries.

🪙 The Great Pressure Valve: Silver Wasn’t Lost — It Built the World

When liquidity fractures… when collateral strains… and capital begins to fracture across time horizons—some assets correct, others collapse, and a rare few begin to reawaken.

And none reawakens like silver.

This isn’t just a shiny metal or an inflation hedge—it’s a cornerstone of civilization.
Long before central banks, before derivatives, before the dollar—there was silver.

• It was the first true world reserve currency

• The store of value that crossed cultures, continents, and centuries

• The medium through which eastern and western empires traded and settled—stretching from the Roman denarius to Chinese sycees on the Silk Road

It formed the financial spine of global commerce, underwriting the rise of cross-border trade, the explosion of industrial economies, and the birth of modern sovereign balance sheets.

📈 The Chart Since 1973 Tells a Story Few Want to Hear

In 1973, after the final link between gold and the dollar was cut, silver’s formal monetary status was unwound—not because it failed, but because a new system chose a different path.

It was not replaced by something better—but by something more convenient to borrow, to expand, to control.

And yet… silver never left.

Every major spike on this chart—1980, 2011, and now—marks a moment when the system returned, even briefly, to what had always worked.

• Not because it wanted to

• But because it had to

Silver isn’t just underpriced.
It’s understood only when trust fails elsewhere.

And when you see the cracks forming across swap spreads, currency pairs, sovereign balance sheets, and global liquidity plumbing—silver isn’t a reaction.
It’s the release mechanism.

The world built itself on silver once before.
When the cycle resets—don’t be surprised when it does again.

🟡 Gold Doesn’t Need to Wake Up — It’s Already Standing Watch

If silver is the pressure valve…
Gold is the anchor.

Where silver carried empires through trade, gold built them through trust.

It was never just currency—it was the final word when all others failed.

And today, as the world wavers on the edge of collateral fragility, gold is quietly reminding us that it never left.

At $3,354.97 this morning, gold isn’t spiking—it’s ascending.
Not in panic, but in purpose.

Zoom out on the chart since 1975.

• The first wave came in the post-Bretton Woods world—gold’s first breath of freedom

• The second surge followed the 2008 financial crisis—when the world embraced money creation and zero interest rates to hold the system together

• And now we’re entering a third phase—a phase not defined by panic or rescue, but by a gradual, widespread realization:

Gold isn’t rising because of hype—it’s rising because it’s being reinstalled.
Not officially. Not loudly. But in vaults, in allocations, and in the architecture of sovereign risk management.

🔍 COMEX Realities — The Calm Surface Still Hides a Tension Point

As of this morning, COMEX open interest sits around 417,000 contracts, representing 41.7 million ounces of paper gold.

The registered gold stock available for delivery?

That’s a relatively elevated figure compared to some recent years.
But it still means that if even half the longs wanted delivery, COMEX would be fully drained.

And the system doesn’t function because everyone wants delivery—it functions because most believe they never need to.
But that belief only holds when confidence in collateral is absolute.

And confidence—quietly, but persistently—is eroding.

Between:

• 🔻 Deeply negative swap spreads

• 💱 Capital fleeing from leveraged FX structures like USD/JPY into conservative anchors like CHF

• 📉 A U.S. dollar index falling through long-term support

…the signals suggest not a breakdown, but a slow awakening:
A realization that real settlement might matter again.

🧠 Gold Is Not Just a Hedge — It’s the Final Settlement Layer

Gold isn’t a bet. It’s the undo button.

• When collateral breaks

• When currencies distort

• When belief in systems becomes belief in self-preservation

…gold becomes the unit of accountability.

And that’s why it's rising steadily—not from hype, but from necessity.

🪙 Gold & Silver Access — Real Metal for Real Shifts
When the foundation trembles and liquidity recedes, capital doesn't disappear—it migrates to what has always worked.

We are in the fifth year of structural silver deficits, while gold quietly approaches a moment of revaluation.
Meanwhile, more ounces of silver are traded each day than are available for delivery.

If you want sovereign-grade, verifiable metal—not gimmicks, collectibles, or coins sold for novelty—I've built the bridge.

Through trusted, licensed relationships, Sovereign Signal readers receive:

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Luke Lovett
📲 Cell: 704.497.7324
🌐 Undervalued Assets | Sovereign Signal
📧 Email: [email protected]

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