Volatility-linked exchange traded products have rallied to a new high for 2011 as markets weigh the odds and potential consequences of a Greek default.

Meanwhile, the equity markets closed on a low note last week on roughly average trading volumes. Of particular interest were products that track CBOE Volatility Index futures, as VelocityShares Daily 2X VIX Short Term ETN (NYSEArca: TVIX) and iPath S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX) closed at new recent highs.

Interestingly, the VIX itself closed at 42.96 on Friday and has traded as high as 48.00 and has traded above 42.96 in the past two month time frame on multiple occasions, yet VXX and TVIX had not reached levels seen this week previously.

It goes to show that the effects of backwardation in the VIX futures market actually has a positive impact on the performance of long VIX ETF/ETN products whereas the contango that existed for so long that was much aligned by the ETF media, currently is not an issue. [Understanding VIX Products]

Non-U.S. dollar denominated debt ETFs saw notable outflows on surging trading volume, specifically with WisdomTree Emerging Markets Local Debt (NYSEArca: ELD) and WisdomTree Asia Local Debt (NYSEArca: ALD) losing about $500 million collectively in assets under management. WisdomTree Dreyfus Brazilian Real (NYSEArca: BZF) also shed about $250 million in assets on heavy liquidation volume earlier in the week.

SPDR Gold Shares (NYSEArca: GLD) continued to bleed assets, to the tune of about $1 billion, and the fund has fallen about 14% from its early September highs. Despite weak equity performance to end the week, evidence of inflows into small caps was clear, as iShares Russell 2000 (NYSEArca: IWM) pulled in about $2 billion in new assets.