Mounting signs of a global economic slowdown hammered stocks and drove demand for sovereign bonds to such an extent that shorter-term yields rose above long rates in the U.S. for the first time since 2007.

The S&P 500 sank more than 1% as the inverted gap in rates for two- and 10-year Treasuries flashed the strongest recession warning yet. European shares plunged after Germany’s economy contracted in the second quarter, adding to angst fueled by weak Chinese retail and industrial numbers. Oil retreated, gold rallied and the dollar held steady.

The damage in American stocks was broad, with four stocks lower for every one that gained in the S&P 500. High-flying tech shares that paced yesterday’s rally amid easing trade tensions gave back all the advance. Banks led the drop as the inverted curve hits lending profits. Macy’s plunged to a nine-year low on weak results.

The British yield curve also inverted for the first time since the financial crisis and the pound edged higher after inflation unexpectedly rose. Government bonds rallied across Europe, with the yield on benchmark bunds sliding to another record.

The warning emanating from bond markets spooked investors already seeking shelter from the fraught geopolitical climate and the impact of the global trade war just a day after equities rallied on a tariff reprieve from President Donald Trump. While curve inversions normally precede economic downturns, they do not necessarily signal imminent doom.

“This is not a positive sign for the market,” Jonathan Golub, chief U.S. equity strategist at Credit Suisse, said on Bloomberg TV. “The Fed is totally empowered to change this dynamic and the market is saying they have to.”

Meanwhile, Hong Kong’s airport resumed normal operations after a chaotic night of protest in which demonstrators beat and detained two suspected infiltrators and Trump warned of Chinese troops massing on the border.

Here are the main moves in markets:

Stocks

The S&P 500 Index dipped 1.4% as of 9:32 a.m. New York time.

The Stoxx Europe 600 Index fell 1.5%.

The U.K.’s FTSE 100 Index dropped 1.3%.

Germany’s DAX Index sank 2%.

Currencies  

The MSCI Emerging Market Index rose 0.2%.

The MSCI Asia Pacific Index jumped 0.9%.

The Bloomberg Dollar Spot Index fell 0.1%.

The euro increased 0.2% to $1.1188.

The British pound climbed 0.1% to $1.2073.

The Japanese yen jumped 0.8% to 105.90 per dollar

Bonds

The yield on 10-year Treasuries sank 10 basis points to 1.60%.

The yield on two-year Treasuries declined seven basis points to 1.60%.

Britain’s 10-year yield fell three basis points to 0.465%.

Germany’s 10-year yield declined three basis points to -0.64%.

Commodities

Gold rose 0.8% to $1,513.79 an ounce.

West Texas Intermediate crude decreased 3.4% to $55.16 a barrel