This post is based on an excerpt from a recent Chart Book published at The Felder Report PRO.
One of the main drivers of foreign risk appetite in US financial assets has been the enormous and growing differential between risk-free yields available here versus those overseas. Over the past decade, US interest rates have moved far higher than those in Germany, making owning financial assets based in the US far more attractive to foreign investors. During this period, the correlation between the S&P 500 and the spread on US and German 10-year yields was fully