Good morning! Here’s your daily dose of critical metrics and news worth keeping an eye on. It’s just the numbers today as it’s been a quiet few days as lots of markets have been closed over the extended holiday weekend. (Plus, I’m doing my part to reduce the seasonal mince pie surplus.)

(Not sure of how to use these metrics in your risk analysis? Read the white paper here and look out for a detailed user’s guide coming in the early New Year.)

Relative Values (90-Days)

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Trends (21-days)

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Commentary and Evaluation

Brent Crude

Brent Crude is mid-range for this 90-day interval as prices have steadily crept up after the lows of early December.

What to Watch

Vladimir Putin told reporters to expect a decree on Monday or Tuesday (today) outlining Russia’s response to the EU’s oil price cap. Recent statements by senior Russian officials have said that production cuts and increases are options under consideration.

See Bloomberg for more

Iron and Steel

(No change) Iron and Steel is very high for this 90-day interval. Prices increased moderately, growing steadily over the last 21 days apart from a small dip.

What to Watch

China’s abrupt removal of the country’s stringent COVID restrictions has resulted in a wave of infections across the country, overwhelming the nation’s health services. Ministers are no longer issuing comprehensive numbers but estimates are that 250 million people, or around 18% of the population, were infected in the first 20 days of December. Statements from Beijing suggest that the government expects it to take 2-3 months for infections to settle to a manageable level. This, coupled with the Chinese New Year celebrations in late January, mean that it will be late-Q1 before we have a sense of how China’s reopening will affect markets, particularly construction-related items, crude, and manufacturing.

See The Financial Times for more

Market Volatility (VIX-US)

(No change) Market Volatility (VIX-US) is very low for this 90-day interval. The VIX settled to end relatively flat over the past three weeks, but daily swings have been significant with periods of significantly increased uncertainty.

What to Watch

(No change) The range of conditions facing markets and investors remains significant and complex, meaning that it’s unclear what will help ease tensions and reduce volatility. The New Year may allow a market reset where risk and uncertainty have been priced in more effectively, reducing turbulence and volatility.

Wheat

Wheat is mid-range for this 90-day interval. Prices increased moderately over the last 21 days.

What to Watch

(No change) Despite agreements brokered by Turkey, Russia is still in a position to impose a blockade on Ukrainian grain exports to exert pressure on Kyiv and her allies. Moscow could also conduct military operations to disrupt spring planting meaning that prices could rise again next spring and summer.

Read more in AGWeek.

Ocean Freight (FBX)

Ocean Freight (FBX) is very low for this 90-day interval. Prices continued their slide, decreasing sharply over the last 21 days although there was a slight uptick in prices between December 23 - 26.

What to watch

China’s easing of COVID restrictions should bring manufacturing levels back up but this is in doubt unless Beijing can control the spread of COVID (See Iron and Steel commentary above). However, recessionary conditions in many countries, plus the difficulty in raising funds while markets are so unsettled (see VIX above), suggest that demand will not be high enough to place significant demands on supply chains.

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Randon Stat

Over the last 45 days of the year, 800 million mince pies will be eaten in the UK, an average of 11.9 per person. (My intake is a touch higher at around 50. Talk about a fat tail….)

That's it for today. Markets open again today so expect more info and updates on Friday to close out the year.