Asian Shares Decline as Bond Market Pressure Mounts Ahead of Jackson Hole Meeting

Asian shares took a hit on Monday as bond market pressure continued to mount. The Nikkei 225 in Tokyo dropped by 0.5% to 65,678.45, while South Korea's Kospi fell 3.5% to 6,664.36.

The Hang Seng in Hong Kong declined 2.1% to 25,465.23 and the Shanghai Composite index lost 0.7% to 3,877.30. However, Australia's S&P/ASX 200 bucked the trend by gaining 0.5% to 9,107.40.

The outlook for inflation remains uncertain ahead of Wednesday's release of the U.S. personal consumption expenditures (PCE) report, which is the Federal Reserve's preferred measure of inflation. The rate of U.S. consumer inflation has remained stubbornly above 3%, and the Fed has been struggling to bring it back down to its target rate of 2%.

Last week, rising bond yields led to an unusual intervention by the U.S. Treasury Department, which sparked concerns about higher borrowing costs weighing on consumer spending. The 10-year Treasury yield rose back to 4.73%, matching its highest point in more than a year, and is near its highest level since 2007.

The bond market remains jumpy, with investors watching for signals from Federal Reserve Governor Kevin Warsh regarding rates and other policies at the Jackson Hole meeting later this week.