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As we enter a new year it’s important to keep risks in mind.  The S&P VIX recently broke 20 and appears headed back towards its recent average of 15 (Goldman’s favorite trade for 2010).  What could ensue is a continued slow grind higher in global equity markets.  But what about the risks abroad?  As we see sovereign debt risks climb in recent weeks we are reminded of the unique country specific risks in this global economy.  A quick review of global VIX indices shows that little has changed in the world in terms of the global risk structure.   Despite inferior economic growth and continuing credit concerns the 30 day volatility in the S&P 500 remains lower than both of its largest global competitors Germany and China.

The German DAX volatility index recently traded at 22, higher than the reading of 19.5 on the S&P.

Chinese volatility has remained high throughout the crisis.  The latest reading of 24 remains higher than both the DAX and the SPX.

Despite continued sovereign debt risks and robust economic growth in China, the U.S. remains the least risky (in terms of volatility) of the major global economies.