Asian shares slip as worries about U.S. debt send Wall St tumbling

TOKYO — Asian shares fell Thursday after Wall Street slumped under pressure from the Treasury bond market and worries about surging U.S. debt.

U.S. futures were little changed, while Japan's benchmark Nikkei 225 shed 1.0% in afternoon trading to 36,944.55.

Hong Kong's Hang Seng lost 0.9% to 23,615.21, while the Shanghai Composite edged down 0.1% to 3,383.10.

Australia's S&P/ASX 200 slipped 0.5% to 8,342.80. South Korea's Kospi dropped 1.1% to 2,595.69.

Rising yields for U.S. Treasury bonds are a canary in the coal mine, Stephen Innes of SPI Asset Management said in a commentary.

''The U.S. still has the biggest markets, the deepest liquidity, and the dollar's inertia working in its favor. But even inertia can't outrun compound interest and structural deficits forever,'' he wrote.

The declining U.S. dollar also weighed on regional markets, according to some analysts, because some Asian nations have significant holdings in dollars.

A weak dollar also hurts Asian exporters, such as Japanese automakers and electronics companies, by reducing the value of their overseas earnings when they are converted into yen.

In currency trading, the U.S. dollar fell to 143.27 Japanese yen from 143.68 yen. It had been trading at 150 yen levels a year ago. The euro cost $1.1335, up from $1.1330.

Investors remain worried over President Donald Trump's actions, including tariff policies that directly affect Asian companies and decisions on major legislation such as a funding bill now in Congress.

''U.S. equities slumped in a ‘Sell America' move as things turned ugly on Trump's ‘big, beautiful tax bill.' '' said Tan Jing Yi, analyst at Mizuho Bank in Singapore.

On Wednesday, shares tumbled on Wall Street after the U.S. government released the results for its latest auction of 20-year bonds.

The government regularly sells such bonds, which is how it borrows money to pay its bills. In this auction, the U.S. government had to pay a yield as high as 5.047% to attract enough buyers to lend it a total of $16 billion over 20 years.

That helped push up yields for all kinds of other Treasurys, including the more widely followed 10-year Treasury. Its yield climbed to 4.59% from 4.48% late Tuesday and from just 4.01% early last month. That's a notable move in the bond market.

The S&P 500 fell 1.6% for a second straight drop after breaking a six-day winning streak, closing at 5,844.61.

The Dow Jones Industrial Average lost 1.9% to 41,860.44, while the Nasdaq composite sank 1.4% to 18,872.64.

Stocks had been drifting only modestly lower early in the day, after Target and other retailers gave mixed forecasts for upcoming profits amid uncertainty caused by President Donald Trump's trade war.

Treasury yields have been on the rise in part because of concerns that the tax cuts currently under consideration in Washington could pile trillions of more dollars onto the U.S. government's debt.

Bond yields have been on the rise recently for developed economies around the world as governments borrow more to pay their bills while central banks like the Federal Reserve have cut back on their own holdings of government bonds.

When the U.S. government has to pay more interest to borrow money, that can push interest rates higher for U.S. households and businesses too, including for mortgages, auto loans and credit cards.

That in turn can slow the economy. Higher yields can also make investors less inclined to pay high prices for stocks and other kinds of investments.

A growing number of companies have recently said tariffs and uncertainty about the economy are making it difficult to guess what the upcoming year will bring. Others, including Walmart, have said they'll have to raise prices to offset Trump's tariffs.

U.S. stocks had recently recovered most of their steep losses from earlier in the year after Trump delayed or rolled back many of his stiff tariffs. Investors are hopeful that Trump will lower his tariffs more permanently after reaching trade deals with other countries.

In energy trading, benchmark U.S. crude added 11 cents to $61.68 a barrel. Brent crude, the international standard, rose 5 cents to $64.96 a barrel.

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AP Business Writer Stan Choe contributed.