Emerging markets had a tough week relative to stocks in the US. EEM was down 2.2% which places the fund down for 2014. Brazil was a little worse off with the EWZ dropping over 5% which places that market down about 6 1/2 % for the year. The numbers for EWZ are even more amazing when you consider than it was up over 23% at the peak this year.
With the markets under pressure you would expect the volatility of options on those markets to have worked higher on the week. That turns out to be a half-truth as VXEEM was down slightly for the week while VXEWZ was up 4.5%. The price charts for both appear side by side with VXEEM on the left and VXEWZ on the right below.
The curves also tell very different stories. Contango persists for VXEEM while backwardation remains in place for VXEWZ. The move higher in the November VXEWZ contract was pretty startling as the futures markets were anticipating a quick move lower in VXEWZ that does not appear to be materializing.