Japan's economy grew far less than expected last quarter, a bad sign for the world's fourth-largest economy and a warning for global markets.

• Growth came in at half of what forecasters expected.
• Exports were strong only because the weak yen makes Japanese goods cheap for foreign buyers.
• Spending inside Japan is the real problem — people are buying less because everything costs more.
• The yen carry trade is slowly unwinding, and a faster unwind would shake markets everywhere.
• Japan holds a huge pile of US government bonds; if it starts selling, interest rates could jump and the dollar could fall.

Outlook: Japan's slowdown looks set to deepen, and the bigger risk is what happens when it starts selling its US bonds.