It’s probably one of the great understatements to describe markets in the third quarter as “challenging”, with July’s initial bounce in global equities giving way to an ugly 9.3% decline in September. And while it’s a similar story in fixed income, it is noteworthy that Australian fixed income has performed materially better (-1.4% in Sept qtr) than global fixed income (-5.1%).

So the question remains: do we still think the final quarter will bring a more genuine rebound for risk assets? And should we begin to tilt our expectations for a bigger recovery in global markets and in turn, a higher Australian dollar?

In our latest update, Tim Toohey, Yarra Capital Management’s Head of Macro and Strategy, details his four reasons for adding risk to portfolios into Q4.