ETF Trends’ Tom Lydon makes a poignant observation when pointing out that MUB , iShares S&P National Municipal Bond Fund ETF is continuing to trade at a discount to its NAV, which for some, is a disturbing bearish signal.

While ETF “discount trading” is not necessarily unusual in and of itself, prolonged disparities (i.e. for more than a brief snapshot in time) often infers a bearish sentiment.  When counting the growing number of municipalities raising their hands for more help and the loom of local financial crisis episodes remains large, its no wonder that the bears are growling.

That said, Ron Quigley, head of fixed income syndicate for Mischler Financial Group was alone last week when he said:        “.. The Federal Reserve Bank said today they’d leave rates at “current low levels through 2014” which simply means that as the economy grows and inflationary fears increase, the long end of the curve will rise.  A steeper yield curve will expedite the process by which the banking system recapitalizes, thus encouraging banks to deploy their excess capital and profits into even more SMEs and consumer lending to fuel more growth

Whichever economic analyst camp you prefer to reside in, MUB’s technical chart is decidedly bearish at the moment. Click on the image to read Tom Lydon’s perspective.