This Week in Emerging Market Volatility – 7/4/2014

The iShares MSCI Emerging Markets ETF (EEM – 44.16) had a solid week rising 1.87% and VXEEM marched lower based on this price action and the long weekend.   Friday’s closing price of 13.71 is actually the lowest recorded close for VXEEM. The history is not that long, only going back to March 2011, but that’s still an all-time low.


The Brazilian market was actually under pressure last week, actually pressure is probably too strong a word as it was down just over one half percent. VXEEM was lower as well, but by only 0.13 and I think we can attribute that to the long weekend which can put a little extra pressure on volatility indexes.


Taking a look at the curves, VXEEM had a pretty even shift with the index moving lower. The VXEWZ curve saw a small move lower in the front month, but the September and October futures actually gained a little value. The steep VXEWZ curve makes me wonder if the markets think the iShares MSCI Brazil Capped ETF (EWZ – 47.84) is going to continue the bullish run it has been on in 2014 through the end of the year.