The emerging market sector did not keep pace with US stocks this past week. EEM was up slightly, but the influence of the US markets had influence on VXEEM which was down almost 23% on the week.
The fun market to watch over the past few weeks has been Brazil. This weekend is the second (and final) round of national elections. The consistent expectation has been that Dilma Rousseff will win reelection, but the polls have moved to a statistical tie so the results will be worth watching this Sunday. VXEWZ was lower last week, but dropped from the 70’s to the high 50’s – both levels can be taken as there being a lot of uncertainty regarding the market’s reaction to the outcome come Monday morning.
The VXEEM term structure curve returned to a more normal shape from backwardation last week. VXEWZ shows the index at a significant premium to the from month November future contract. October went off the board last week settling at 65.80 – that may be a settlement record until the next election in Brazil.