The global economy is rebounding, but there is one big problem

TOKYO/HONG KONG (June 14): There’s a dark cloud building behind the world’s best period of synchronous growth among developed and emerging economies this decade -- one that in time could rain down volatility in global markets.

The problem, identified by strategist and hedge fund manager Stephen Jen, is a deepening imbalance in the lack of new safe-haven assets as the world’s output expands.

China and other developing nations are accumulating wealth, but failing to create sophisticated local markets that feature their own risk-free instruments. That’s left a dangerous reliance on US Treasuries, according to Jen’s argument, perpetuating a bond bubble and pushing investors into riskier assets.

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