LIVE MARKETS-If you think the ECB won't hike soon, can you trade it?

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IF YOU THINK THE ECB WON'T HIKE SOON, CAN YOU TRADE IT?

Markets, and some big brokerages, see a reasonable chance the European Central Bank will hike interest rates in April, in a bid to show it will not tolerate any spillover from higher energy prices into the broader inflation.

For those who think that's a pretty drastic response -- it's not 2022, might the hit to growth be more than the inflationary effect? -- there should be a trade there.

And UBS and Danske Bank rates analysts recommend just that. UBS, for example, said in their post meeting note that the "ECB's growth downgrade points to a low probability of a near-term hike so we receive April ECB at 13 bps." I.e. they are recommending a trade that expects the ECB will not hike at that meeting.

Citi rates analysts sort of agree but they say it's too difficult to actually trade that, and they were burnt last week.

"Base case is still that the ECB will take time to gather evidence to hike, and it can do so because the market is doing the hawkish work for it," they said in their note.

However, they say, "While the front-end looks like it is overshooting to us, it is incredibly difficult to fade. As has been the case since the conflict started, if you know what is going to happen to oil prices, then you know what is going to happen to the (European) front-end."

"We admit that we just don’t."

This week, they received the July meeting "thinking the immediate meetings were relatively safe."

"This has been proved wrong very quickly," they said, with the trade they proposed on Wednesday stopped out on Thursday.

(Alun John)

EARLIER LIVE MARKETS POSTS:

NO SYSTEMIC RISK FROM PRIVATE CREDIT, UNICREDIT SAYS CLICK HERE

U.S. ECONOMY CAN'T SHRUG OF HIGH OIL PRICES AS IT DID 15 YEARS AGO CLICK HERE

CAUTIOUS TRADING CLICK HERE

BEFORE THE BELL: EUROPEAN FUTURES HIGHER, BUT STOCKS SET FOR A WEEKLY DECLINE CLICK HERE

MORNING BID: HAWKISH RATE REPRICING HALTS THE DOLLAR'S RALLY CLICK HERE