Investors are also wary about the economy’s ability to withstand a possible third rate hike later this year, along with the Federal Reserve’s plans to reduce its balance sheet.
“The U.S. economy looks quite dull at the moment,” Neil Dwane, global strategist at Allianz Global Investors, told the Wall Street Journal. “Despite falling unemployment, inflation is still low and the economy is struggling to grow in the uninspiring 1-2% range.”
Moreover, speculation that President Donald Trump is being investigated for possible obstruction of justice charges fueled market anxiety and damped the outlook on the current administration’s ability to push through its pro-growth agenda, which fueled the recent bull market rally.
Looking ahead, traders will be watching out for the Bank of Japan’s end to a two-day meeting on Friday, which may provide clues on policy maker’s outlook for inflation and growth.
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