Despite some volatility on account of the Lebanon crisis, the hurricane forecasts, the London terror threat, and weak US economic data, global financial markets continued to recover in August on the back of progressively better (or rather less negative) returns seen over the previous three months. The Eurekahedge Hedge Fund Index returned 0.8%1 for the month of August and 6.4% for the year to August. The month saw profitable opportunities in most asset classes, as global inflation fears subsided and the markets began to anticipate the end of the Federal Reserve’s monetary tightening cycle. The Fed’s pause came amid signs of an economic slowdown in the US and forecasts that inflationary pressures will ease gradually. Market movements during the month were shaped by the ceasefire between Israel and Hizbollah (which reduced overall geo-political risk as also the risk premium on oil). Energy prices saw further downward pressure owing to the absence of any disruptions in production despite the active hurricane season in the Gulf of Mexico.