TOKYO (AP) — Asian shares mostly slipped Friday as rising yields in the bond market on Wall Street set off expectations that high interest rates would continue in the U.S.

Japan’s inflation data showed consumer prices rose 3.1% from a year earlier in July, down from 3.3% in June. But that was still higher than the 2.5% forecast by some analysts and above the Bank of Japan’s target at 2%.

The core consumer price index, which eliminates energy and fresh food prices from the measure, rose 4.3% on year, according to the Ministry of Internal Affairs and Communications.

Japan’s Nikkei 225 slipped 0.6% to finish at 31,450.76. Australia’s S&P/ASX 200 was virtually unchanged, inching up less than 0.1% to 7,148.10. South Korea’s Kospi shed 0.7% to 2,502.52. Hong Kong’s Hang Seng dropped 1.7% to 18,017.77, while the Shanghai Composite edged down nearly 0.7% to 3,142.10.

Also on investors’ minds is what appears to be China’s shaky recovery from the negative economic effects of the coronavirus pandemic.

“In terms of China, there has been very little cause for optimism due to the dire macro indicators, a plunging yuan and property developers hitting troubled waters,” said Tim Waterer, chief market analyst at KCM Trade.

Wall Street fell for a third straight day, with the S&P 500 sinking 33.97, or 0.8%, to 4,370.36. August is on track to be its worst month of the year by far.

The Dow Jones Industrial Average dropped 290.91 points, or 0.8%, to 34,474.83, and the Nasdaq composite fell 157.70, or 1.2%, to 13,316.93.

The losses were widespread. Some of the hardest hit were high-growth stocks seen as the most vulnerable to higher interest rates. Meta Platforms sank 3.1% and Tesla dropped 2.8%. Apple fell 1.5% and was the heaviest weight on the S&P 500.

Stocks broadly have been retreating in August following a torrid first seven months of the year. That’s in part because a swift rise in bond yields is forcing a reassessment of how much to pay for stocks.

The 10-year Treasury, which is the centerpiece of the bond market, is now yielding 4.28% after touching its highest level since October.

If it reaches 4.34%, it will be at a level unseen since 2007, according to Tradeweb. That’s before the financial crisis and Great Recession caused yields to collapse to record lows. The 10-year Treasury was yielding less than 0.70% three years ago.

Higher yields are good for bond investors, who get fatter payouts for their investments. But it hurts stock prices because investors are suddenly less inclined to pay high prices for investments that aren’t as steady as bonds.

Higher yields also mean borrowers have to pay more to get cash, which can crimp corporate profits and cause unforeseen things to break in the system, like the three high-profile U.S. bank failures that shook markets this spring.

Homebuyers are feeling the sting. The average rate on a 30-year mortgage hit its highest level this week in more than 20 years.

Yields have been on the rise as more reports show the U.S. economy remains remarkably resilient. On the upside for markets, the data mean the economy has been able to avoid a long-predicted recession. But on the downside, it could also keep upward pressure on inflation. That would give the Federal Reserve reason to keep interest rates higher for longer.

More data came in Thursday showing a firm U.S. economy.

Fewer workers applied for unemployment benefits last week than economists expected. It’s the latest signal that the job market continues to be solid.

A survey of manufacturers in the mid-Atlantic region also unexpectedly showed growth, when economists were expecting another month of contraction. Manufacturing has been one of the areas of the economy hit hardest by much higher interest rates.

“The labor market continues to be resilient — maybe too resilient for the Fed’s liking,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.

Other strong economic data recently, including a report showing an acceleration in sales growth at U.S. retailers, mean the Fed could hike interest rates again at some point, he said. Hopes had been rising on Wall Street that the Fed could be done after it raised its main rate last month to the highest level in more than two decades.

Traders had also been hoping the Fed would begin cutting rates early next year. Such a move would be a relief for markets because high rates work to lower inflation by slowing the entire economy and hurting prices for investments.

Inflation has cooled considerably from its peak above 9% last summer. But consumers still paid prices that were 3.2% higher in July than a year earlier, and economists say the last stretch to get inflation down to the Fed’s 2% target may prove to be the most difficult.

A stronger economy would burn more fuel, and oil prices rose Thursday to recover some of their slide from earlier in the week. That helped propel stocks of energy producers to some of the rare gains within the S&P 500. Exxon Mobil rose 1.9% and ConocoPhillips gained 1.8%.

In energy trading on Friday, benchmark U.S. crude gained 22 cents to $80.61 a barrel. Brent crude, the international standard, rose 5 cents to $84.17 a barrel.

In currency trading, the U.S. dollar inched down to 145.23 yen from 145.83 yen. The euro cost $1.0889, up from $1.0873.