(Bloomberg) -- Stung at home by fraught politics and flat economies, international investors are squeezing themselves further into the crowded trade that is American markets.

Over the last month, about $30 billion of fresh money has flooded into stock funds, with 94% of the allocations lavishing US assets — tech shares in particular — according to EPFR Global data compiled by TD Securities.

The buy-America trade keeps working for now: The S&P 500 outpaced the rest of the world this week by the widest margin in 15 months, while long-dated Treasuries rallied 3.5% for the best run of 2024.

Belying debt woes and widening political gulfs, America is increasingly the only game in town for international traders starved for stability amid European election stress and China’s monetary struggles.

Foreign interest in the US credit market is running similarly high. During the first quarter of 2024, overseas investors poured $187 billion into US company notes, according to Torsten Slok, chief economist at Apollo Global Management. That’s a 61% jump from the same time last yea

Reports showing stateside inflation easing with few signs of a recession fueled the latest bullish advance, extending total returns in the tech-heavy Nasdaq 100 to more than 80% since the start of 2023. Along the way, funds betting on the rest of the world are getting crushed. 

The US “is still the most stable country, with a combination of AI/tech-related companies that just has no equal elsewhere in the world,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. Its supremacy “can continue a little while longer until some of these factors change, or a suitable substitute appears,” he added.

The week was a microcosm for the American-asset hegemony that has held sway for large stretches of the last 15 years. Investors flocked to havens like Treasuries, pushing 10-year yield to a two-month low, despite the Federal Reserve signaling a slower schedule of interest-rate cuts. Meanwhile, technology megacaps led the S&P 500 to its seventh gain in eight weeks, with the index surpassing 5,400 for the first time. 

Practically everywhere else, shares suffered, with the MSCI World ex-US index dropping more than 2%. In China, stocks have declined five weeks in a row as a sluggish recovery calls for further monetary easing. A lack of details from Bank of Japan’s bond buying plans added pressure on the yen. 

It was worse in Europe. French shares tumbled the most in more than two years, erasing all their 2024 gains, following President Emmanuel Macron’s decision to call a snap election. Investors also dumped the nation’s bonds, driving their yield premium over safer German peers to the biggest weekly increase on record. 

“The US has the biggest and most innovative companies with strong earnings growth but profit also from its safe haven status,” said Ulrich Urbahn, Berenberg’s head of multi-asset strategy. “Momentum begets momentum. FOMO is clearly also a reason.”

While that might be true, American markets are sucking in money at a time when numerous indicators foreshadow an uncertain future. The economy is weakening, the bond market remains antsy amid Fed policy uncertainty and a contentious presidential election looms. All the enthusiasm for equities has pushed valuation premiums to a two-decade high.

US asset momentum is creating headaches for anyone following a strategy of geographical diversity. Among 644 exchange-traded funds that specialize in international assets, less than 7% have managed to beat the S&P 500, data compiled by Bloomberg show. But the top-heavy character of its white-hot stock advance is creating risks at home, too.

Among long-only mutual funds, virtually the only sector with an increase in industry exposure this year is technology. Banks, healthcare and consumer discretionary companies have seen their underweight in those portfolios swell, according to data compiled by Barclays Plc strategists including Venu Krishna.

Chasing gains in American stocks is far from risk-free given the extreme weights commanded by the largest tech firms, according to Que Nguyen, chief investment officer of equity strategies at Research Affiliates. 

“We have been in an era where the big have gotten bigger for a long time now, and it’s not clear that economic forces can sustain this,” she said. “Challenges to large US companies’ dominance will eventually emerge,” she said, citing potential threat from smaller firms or rivals from overseas. 

--With assistance from Josyana Joshua.

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