This Week in Emerging Market Volatility

Following the lead of VIX, VXEEM was up 23% on Tuesday after a relatively calm Monday. VXEEM remained at higher levels for the week despite EEM basically finishing the week flat. I read a headline that stated emerging market funds were experiencing outflows. Possibly volatility players see this as an increase in the risk of a drop in EEM in the near term. In addition to an almost 6% rise in VXEEM – the March futures were up about 6% as well. 

VXEWZ ran up on Monday before the volatility party started in the other markets. This disconnect continued as Brazilian market volatility was down 1.4% on the week. However, the futures markets are expecting a little more on the risk side and all four active contracts rose on the week. This despite when the wee was done, EWZ gaining 0.69%.