Shifting Leadership in Global Growth

Global business activity is showing signs of stabilization, but beneath the surface, the world economy remains divided. Growth momentum has improved in several major developed economies, led by a stronger U.S. expansion and a tentative recovery in parts of Europe, while activity across several large emerging markets has cooled from the rapid pace seen earlier this year. Against this backdrop, investors must also contend with lingering vulnerabilities in the global financial system, including Japan’s outsized role as one of the largest foreign holders of U.S. Treasury securities, a reminder that shifts in monetary policy or investor behavior abroad can have far-reaching consequences.