Equity markets made gains in December as optimism continued to grow with the COVID-19 vaccination programmes rolled out in parts of the world. Emerging markets outperformed their developed counterparts in December with the MSCI Emerging Markets index returning 7.4%. The British government bond index was up 1.7%. GBP risk-free rates decreased at all terms in December. UK’s CPI and RPI inflation measures fell by 40 basis points in November to 0.3% and 0.9%, respectively. Realised volatilities declined sharply on all major indices in December, with most falling below their historical averages. The realised volatility of the FTSE 100 index was 13.2% at month-end. In contrast to realised volatilities, implied volatilities of most major indices increased by month-end.