Just as US traders were attempting to take a breather from all the worry about whether Federal Reserve rate hikes would cause a recession, speculation about a policy shift on the other side of the world roiled markets worldwide.
Stocks lost ground, Treasury 10-year yields reached 4%, and the yen rose on news that the Bank of Japan will discuss tolerating higher domestic bond yields at its meeting on Friday. The VIX, Wall Street's "fear gauge," increased the most since May.
With the BOJ widely expected to maintain its ultra-easy policy, investors will be watching to see if officials use a revision to their inflation forecast to tweak the yield curve control programme. Some economists believe the higher inflation target could be used to justify changing YCC.
Equities rose earlier in the day after the US GDP unexpectedly increased in the second quarter, while pending home sales unexpectedly increased in June. On Wednesday, Fed Chair Jerome Powell announced that his staff had abandoned the recession forecast that had been in place since March, when banking turmoil had raised fears of a credit crunch.