For the first time in a while emerging markets were lower while the S&P 500 made a move to the upside. This may have been an expected occurrence since those markets have been on a tear to the upside over the past few months. What started out as a dismal (and head scratching) year for emerging markets appears to have been salvaged. The iShares MSCI Emerging Markets ETF (EEM – 42.74) and iShares MSCI Brazil Capped ETF (EWZ – 50.24) were down about 1% last week. The volatility markets both had unusual reactions to the price action.
VXEEM was up over 5% based on the drop in EEM. However, all the futures prices were actually lower on the week. This resulted from VXEEM going out at a very steep discount to the futures last week. VXEWZ was also much higher rising almost 8%. The front month future was up 0.40 and the next two months were actually unchanged for the week. It appears that one slightly bad week for EEM and EWZ did not result in much panic in the respective volatility markets.