By Gina Lee

Investing.com – Asia Pacific stocks were mostly down on Tuesday morning, with investors’ focus remaining on inflation’s impact on the economic recovery from COVID-19. Elevated asset prices have been warned.

Japan’s inched down 0.01% by 9:56 PM ET (2:56 AM GMT) and South Korea’s was down 0.22%.

In Australia, the edged up 0.11% while Hong Kong’s edged down 0.11%.

China’s inched down 0.09% while the inched up 0.04%. After a report by the authorities that licenses could be issued to companies offering after-school tutoring, Chinese education stocks rose.

The Chinese Communist Party’s Central Committee also continues its meeting, which will run to Nov. 11.

The U.S. Treasury yields rose after the disappointing three-year bills auction. But, the 30-year Treasury inflation-protected bonds yield fell to a new record.

As risk sentiment improves due to COVID-19 treatments and easing travel restrictions, global shares are still at record highs.

Key central banks suggested they might gradually start asset tapering. The big danger is that inflationary forces, which are caused by high energy prices and inefficient supply chains, could continue for much longer than predicted.

“Central banks were less hawkish than the markets were expecting them to be last week so we are seeing real yields going further down into negative territory,” BNY Mellon (NYSE:) Investment Management senior market strategist Lale Akoner told Bloomberg.

The reflation trade is coming back again and the market is pricing in “a mid-cycle environment,” she added.

However, global shares’ recent rally is in question, with the U.S. Federal Reserve saying that “asset prices remain vulnerable to significant declines should investor risk sentiment deteriorate, progress on containing the virus disappoint, or the economic recovery stall,” in its twice-yearly Financial Stability Report. Mary Daly from the Fed Bank of San Francisco is scheduled to address later in today’s session.

U.S. data, including the and , will be released on Wednesday ahead of Thursday’s holiday.

In Asia Pacific, China’s property sector stepped back into the spotlight. Scenery Journey Ltd. is a China unit. Evergrande Group (HK-), has reportedly not received payments for Coupons that they were supposed to have on Nov. 6.

China publishes data including its own on Wednesday.