Economic expansion continued in the third quarter, but supply disruptions weighed on its momentum. Returns were relatively flat to negative for the quarter (U.S.Stocks, +0.6%, International Stocks, (-0.4%), and U.S. Bonds, +0.1%).Commodities are performing the best year to date (+29.1%), supported by solid industrial demand and restrained production. Emerging markets pulled back this quarter (-8.1%) due to concerns around China.

We believe the U.S. is in a mid-cycle expansion phase. You might expect healthy volatility in this phase, even meaningful drawdowns, but historically this volatility has been relatively short-lived. You have probably noticed some of this volatility year-to-date.

Things we expect to impact the markets in the near-term:

- Continued vaccination progress globally, varied by region

- China’s deceleration and regulatory tightening impacting global growth

- Supply chain issues, high backlogs and depleted inventories keeping inflation elevated for some time

While inflation and mid-cycle economic expansion might lead us to tilt towards risk assets, we believe diversification and disciplined rebalancing are critical to managing risk.

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