Emerging Market 'Risk' Has Never Been Lower, But...

Tyler Durden's picture

As global central bank exuberance suppresses equity volatility, emerging markets are catching up (or down).

Expected uncertainty in Emerging Market Equities has never been lower... (in fact EEM implied vol is now less than half its lifetime average of 29.7%)

However, as Bloomberg notes, the Federal Reserve’s hawkish posture last week sets the stage for an uptick in developing-nation volatility in the second half of the year, Bank of America Merrill Lynch strategists said.

Oh and there's one more thing...

A resurgence in EM vol is baked in the cake, no matter what happens, as China's collapsing credit impulse begins to ripple across the world.

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Yen Cross's picture

 Tyler you can clearly see the hedges unwinding. Emerging markets--- Ha fucking Ha. 

 All of the emerging market currencies are pegged to $usd or € dollars.

     Look at the monthly and weekly eur/usd charts.  The weekly is getting ready to fall over.

  Mean~While, I'm milking the SNB, with my usdchf trade.   Ha...

Seasmoke's picture

And They need to start unwinding. Directly into Gold.

Yen Cross's picture

   They're trying to reduce Beta, on their balance sheets.  I just started shorting some sector bond ETFs.

  I won't be buying, in the money calls, any time soon. Nor, would I recommend laddering[stacking] put spreads.

  The Squid always talks it's book.

Horse Pizzle's picture

Venezuela, Russia, India, China are submerging markets.

BorisTheBlade's picture

And only proud Ukraine reigns supreme.

Yen Cross's picture

 I'm looking at SKEW charts for F/X .  Everything looks like a coiled spring ready to break.

 I shorted three large _U7 earlier.

  This can't be good