Government bond markets rose on Thursday after a sharp slowdown in euro zone business activity fueled concerns about the health of the global economy.

Germany’s 10-year Bund yield fell 0.18 percentage points to 1.44%, reflecting gains in benchmark debt instruments, after a closely watched survey of euro zone business activity showed a reading of 51.9 in June, a 16-month low, Much lower than the consensus estimate of 54.

The disappointing data stoked fears that global growth is slowing as central banks aggressively raise interest rates to try to rein in inflation at the highest level in decades.

Prices for U.S. government debt also surged, with the yield on the 10-year U.S. Treasury note, seen as the benchmark for global borrowing costs, falling 0.11 percentage point to 3.04%. The two-year U.S. Treasury yield, which is closely tied to rate expectations, fell 0.1 percentage point to 2.96%.

On Wednesday, Federal Reserve Chairman Jay Powell said in the first day of two days of congressional testimony that a recession in the world’s largest economy is “certainly possible” — even though he believes the economy is resilient enough to withstand more Harsh monetary policy. He added on Thursday that the Fed had an “unconditional” commitment to fighting inflation, which hit 8.6% in May.

“The bond market is grappling with the idea that central banks are slowing rates significantly,” said Peter Goves, fixed income analyst at MFS Investment Management. “Growth concerns have been around for a while, but they are suddenly in focus.”

“Central bankers have been paying more attention to inflation lately – and rightly so,” he added, “but they have to put on the tightening needle without significantly weakening demand.”

In the stock market, Wall Street’s S&P 500 was flat at lunchtime in New York. The tech-heavy Nasdaq Composite rose 0.7% but is still down nearly 30% so far this year. The Stoxx Europe 600 closed down 0.8%, Germany’s Dax fell 1.8%, Deutsche Bank fell 12% and Mercedes-Benz fell 6%.

Kit Juckes, global fixed income strategist at Societe Generale, said the market won’t become clear until after the summer.

“Everything was as clear as mud,” he said. “No matter how much you raise rates now, demand is going to be hot this summer, and then it may cool down, or it may continue.”

Norges Bank joined a wave of aggressive central bank rate hikes to fight inflation on Thursday, raising borrowing costs by 0.5 percentage points to 1.25 percent, the first such hike since July 2002. Norway’s rate hike followed the Fed’s 0.75 percentage point hike, the largest increase since 1994.

The Bank of England and the Swiss National Bank also raised rates last week, while the European Central Bank has already laid out plans to raise rates next month for the first time in more than a decade.

Erica Dalstø, chief Norway strategist at Scandinavian bank SEB, said hawkish moves by other central banks had caused Norges Bank to deviate from its guidance. “It’s clear that Norges Bank is so concerned about inflation risks that they stop mentioning the risks to households.”

Oil prices fell 1.1 percent to $110.46 a barrel on Thursday, extending losses from the previous day.

In Asian markets, Hong Kong’s Hang Seng rose 1.3%, while Japan’s Topix was flat.