Australia’s economy grew at the weakest pace in a year last quarter as strength in trade was offset by rising interest rates and high inflation, and all the signs are a further slowdown lies ahead.

Data from the Australian Bureau of Statistics on Wednesday showed real gross domestic product (GDP) rose 0.5% in the December quarter, down from 0.7% in the previous quarter and under forecasts of 0.8%.

Annual growth was still solid at 2.7%, while the report contained plenty of evidence of cost and price pressures that underline the case for yet further increases in interest rates in the struggle against inflation.

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China’s manufacturing activity expanded at the fastest pace in more than a decade in February, an official index showed, smashing expectations as production zoomed after the lifting of COVID-19 restrictions late last year.

The manufacturing Purchasing Managers’ Index (PMI) shot up to 52.6 from 50.1 in January, according to National Bureau of Statistics figures released on Wednesday, above the 50-point mark that separates expansion and contraction in activity. The PMI far exceeded an analyst forecast of 50.5 and was the highest reading since April 2012.

China, the world’s second-largest economy, recorded one of its worst years in nearly half a century in 2022 due to strict COVID lockdowns and subsequent widespread infections. Beijing abruptly lifted the curbs in December as the highly transmissible Omicron variant spread across the country.

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JPMorgan Chase & Co. has become the first City of London forecaster to predict that Britain will stay out of recession in 2023 after a slew of more resilient growth signals in recent weeks.

The US bank delivered big upgrades to its UK growth projections after a resurgence in consumer confidence and a surprise return to growth territory in the latest purchasing managers’ index. While the National Institute of Economic and Social Research also expects no recession, JPMorgan is alone among banks in making that the central forecast, according to a Bloomberg survey.

The UK economy was expected to lag behind the US and eurozone in 2023. But forecasters are turning more positive as political turmoil cools and falling natural gas prices ease the pressure on households and businesses.

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For the first time in more than two decades, some of the world’s most risk-free securities are delivering bigger payouts than a 60/40 portfolio of stocks and bonds.  

The yield on six-month US Treasury bills rose as high as 5.14% Tuesday, the most since 2007. That pushed it above the 5.07% yield on the classic mix of US equities and fixed-income securities for the first time since 2001, based on the weighted average earnings yield of the S&P 500 Index and the Bloomberg USAgg Index of bonds.

The shift underscores how much the Federal Reserve’s most aggressive monetary tightening since the 1980s has upended the investing world by steadily driving up the “risk-free” interest rates — such as those on short-term Treasuries — that are used as a baseline in world financial markets. 

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