As the major US indexes continue to make new highs the emerging markets are trying to get on track. Both the iShares MSCI Emerging Markets (EEM – 39.28) and iShares MSCI Brazil (EWZ-43.72) were higher with EWZ leading the way up over 3% on the week. Apparently bargain hunters are coming in after the market was down over 20% from its peak. It appears the Brazilian central bank is taking actions that the markets like along with a bit of a currency rebound for the Brazilian real. The EEM got a boost from Brazil, but also China which reported what could be considered positive economic data last week.
The reaction of the volatility markets has been pretty dramatic with VXEEM dropping 9% and the index moving to a discount to the front month future contract while VXEWZ was down 8%, but the curve still has a bit of a backwardation look to it, although not nearly as much as the past few weeks. Maybe a return to normalcy is on the horizon.