Slowing economic activity, rising inflation, political uncertainty and default fears in the Chinese property sector was the story in Q3. Developed market equities closed the quarter marginally higher, in contrast with Chinese and Emerging Market equities which experienced losses of 6% and 8% respectively. During September however Chinese equities staged a comeback, rising 1.3%, while developed market equities experienced losses in excess of 3%. Government bond yields rose sharply in the final weeks of September, as persistent overshoot in inflation readings during the quarter and a relatively more hawkish tone from Central Banks around the world prompted investors to re-think the attractiveness of long duration fixed income assets. A spike in energy prices due to a combination of heightened demand and limited supply, coupled with broadening inflation pressures due to production and supply chain bottlenecks make the fixed coupon payments provided by bonds to look more and more unattractive. For the time being, investors don’t seem to demand  materially higher interest rates to continue funding governments around the world, but if inflation turns out to be rather sticky, it is hard to see how this will continue to be the case.