By Gina Lee

Investing.com – Asia Pacific stocks were mostly down on Wednesday morning after their U.S. equivalents recorded their worst day since May 2021 and bond yields climbed on concerns about inflation.

Japan’s tumbled 2.55% by 10:27 PM ET (2:27 AM GMT), with the incumbent Liberal Democratic Party to elect a leader, who could become the country’s next prime minister, on Wednesday.

South Korea’s slid 1.91% and in Australia, the fell 1.32%.

Hong Kong’s rose 1.20%.

China’s fell 1.06% and the slid 1.16%, with the , and purchasing managers indexes due on Thursday.

Meanwhile, China Evergrande Group (HK:) faces its latest bond interest payment interest on Wednesday, with no signs that it has cleared an earlier payment that was due during the previous week.

Washington D.C. worries are growing about a debt-ceiling implosion after Republicans blocked a Democrat proposal to raise the debt limit.

Both U.S. Federal Reserve Chairman Jerome Powell, and U.S. Treasury secretary Janet Yellen testified before a Senate Banking Committee hearing. They warned of the dire consequences of default if there is no action to increase the debt limit. They will be testifying before the House Banking Committee on Thursday.

The closed 2% lower, the most since May 2021, and the fell the most since March 2021. The benchmark also and the yield on the 30-year note earlier jumped almost 10 basis points.

Washington’s developments are occurring at a moment when energy costs have soared due to China’s power shortage and the Fed may soon begin asset tapering.

“What we got here is a stock market that finally looks vulnerable as Treasury yields surge, oil prices look like they could easily hit $90 a barrel, and as supply chain issues show no signs of easing,” OANDA senior market analyst Edward Moya told Bloomberg.

“There is a lot of drama happening on Wall Street and most of it has to do with a reset of inflation expectations.”

Meanwhile, central bank chiefs, including the Bank of England’s Andrew Bailey, the Bank of Japan’s Haruhiko Kuroda, the European Central Bank (ECB)’s Christine Lagarde, and Powell will participate in an ECB Forum panel later in the day.

On the data front, the U.S. was at 109.3 in September, a third consecutive month of falls.