I investigate yield differentials from a different perspective. To account for the still non-negligible differences in long-term government bond yields of EMU members relative to Germany, the literature has placed much attention on the relative importance of liquidity and credit risk factors. I would argue that the main driver of spreads is the U.S. long-term rate. Results qualify earlier evidence and document an additional and independent role for the international risk factor. This paper also shows that working on spreads relative to German rate is a frustrating exercise while the use of the U.S. rate as external reference allows of sharper results.