The iShares MSCI Emerging Markets ETF (EEM – 43.14) had a pretty tame week this past week gaining about half a percent. The VXEEM action can be described as a grind to the downside as EEM moving higher with little volatility behind the move.
It could be said that EEM rising was despite what was going on in the Brazilian market. The iShares MSCI Brazil Capped ETF (EWZ – 47.83) lost almost 3% last week as some weak economic numbers weighed on Brazilian stocks. VXEWZ ticked higher rising a little over 2%.
The term structure curves for both VXEEM and VXEWZ remained in contango despite the pressure on Brazilian markets. This would be expected from VXEEM since the underlying ETF moved up last week. With respect to VXEWZ it could be an indication that the market is shrugging off the 3% drop in EWZ as a short term pull back and not the indication of the beginning of some sort of sustained correction.