After rising relatively uninterrupted since last November, US equities took an overdue breather in the third quarter. As shown in the table below, the S&P 500 was up a meager 0.6% in the quarter, with the Russell Midcap Index falling by 0.9% and the small-cap Russell 2000 Index faring worse with a negative 4.4% return. Commodities continued to do well this year, gaining 6.6% in the quarter, adding to its stellar year-to-date (YTD) return of 29.1% (as per the Bloomberg Commodity Index). In fact, the best performing asset classes YTD have been those that historically benefit from an inflationary environment, namely equities, real estate (REITs) and commodities. However, non-US equities remain laggards, in large part due to the buoyant US dollar and brewing concerns about China’s economic growth.