Global data has been relatively positive with the US and Europe showing signs of improvement in industrial production, housing and employment. Easy money still exists because most economies are still operating far below potential and the pace of growth remains fragile. If growth were to accelerate strongly one could be confident that policy rates will normalise. We maintain that a withdrawal of stimulus should only take place in early 2014 as the global recovery remains fragile. The local economic growth forecast has been reduced to 2% for 2013. Lower growth and higher inflation is likely to keep the policy stance on hold for the present. We therefore expect interest rates to remain unchanged at least until the middle of 2014 as inflation may very well have peaked at 6.4% in August. Following a notable rally in September and stabilisation as the US government shut down commenced, the bullish bias towards EM has pushed local yields downwards. Even the FRA curve has pared some of its tightening expectations as the rand has rallied and disinflation expectations have broadened. The fund returned 0.96% for the quarter and 2.22% for September. With volatility picking up over the last few months we reduced our bond holding and increased the cash weighting.