Australia’s yield curve inverted for the first time since the financial crisis as traders increasingly priced in the risk of a recession.

The gap between yields on 10- and three-year government bonds fell as low as minus two basis points on Thursday for the first time since 2008. The move was led by a rise in short term yields after Australia’s jobs report came in better than expected.

Australia’s curve mirrors peers from the US to New Zealand as traders bet an extended global hiking cycle will push economies into recession. Australia’s growth unexpectedly slowed last quarter after the Reserve Bank of Australia’s steepest interest-rate hikes in a generation crimped household spending and construction.

The RBA however has kept a hawkish bias, worried inflationary pressures are becoming entrenched amid accelerating labor costs while acknowledging achieving a soft landing is becoming difficult. Economists have put the chance of an economic downturn in Australia within the next 12-months at 50%, a Bloomberg survey showed.

“The RBA’s change of tone last month has revealed a willingness to take policy more restrictive, more quickly,” said Kenneth Crompton, senior fixed income strategist at National Australia Bank in Sydney. “All else equal, that does add to the risks of policy contributing to a recession in Australia, and the tendency of the curve to invert reflects that.”

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