Wall Street has edged higher at the market open, helping the Nasdaq hit a record high (remember it hit 10,000 for the first time ever yesterday, so it wasn’t a huge feat to beat that level again today)

• Nasdaq opened up 0.6% at 10,014 points
• Dow opened 0.1% higher at 27,244 points
• S&P 500 opened 0.1% higher at 3,211 points

Neil MacKinnon, global macro strategist at VTB Capital, says the US Fed is unlikely to forecast GDP growth above 2.5% for 2021 when it releases projections later today:

It is unlikely that the FOMC’s GDP forecast will be much higher than 2.5%, as the Fed can explain such a modest increase in the light of a wide output gap that will take time to recover.

A much stronger GDP growth forecast would certainly come to the attention of bond investors, who might think that this would mean a faster-than-expected normalisation of policy.

It would also be a surprise if the Fed deviated much from its recent messages to the market of being there to provide policy support for the economy.

Fed Chair Powell might also want to again send the message that accommodative policy will be in place for some time – i.e. dovish forward guidance. The potential upset today is that Fed Chair Powell sends an inadvertent hawkish message and/or highlights concerns with new highs in equity markets.

More comments being reported from Andrew Bailey:

After the doom and gloom of the OECD report, Bailey has said that there will be elements of a faster-than-usual economic recovery as the government lifts Covid-19 restrictions. He adds that we are seeing elements of that recovery starting already.

However, there will be a greater degree of natural caution by people after lockdown ends, and he warns that we don’t know how much economic scarring there will be.

Worse than Italy. Worse than Spain. Britain has already had more deaths from Covid-19 than any other European country. Now it faces the possibility of a second embarrassment: the deepest recession of any nation in the developed world, writes our economics editor Larry Elliott.

There’s not much in it, according to the latest forecasts from the Organisation for Economic Cooperation and Development. Italy and Spain are also propping up the league table put together by the Paris-based thinktank. A lot can happen between now and the end of 2020, a year that has not yet reached its mid-point.

Even so, the OECD’s findings make grim reading. It thinks the economy will contract by 11.5% in the event of a single hit and by 14% if the virus returns later in the year. The 37-member thinktank says one is no more likely than the other.

So why is the UK set to do much worse than Germany, which expects output to contract by 6.6% in the event of a single hit?

One factor identified by the OECD is the importance of the service sector to the UK economy. Trade, tourism, real estate and hospitality together make up a sizeable chunk of gross domestic products and all have been hard hit by the lockdown.

You can read Larry’s full analysis here:

Stocks are on a bit of a rollercoaster ride today, with the FTSE 100 edging back into positive territory to trade up 0.1%

US futures are also showing some green shoots just a little over an hour before Wall Street opens for trading.

Oil prices are continuing their downward slide, with Brent crude down 1.8% and WTI slumping 2.2%.

While oil prices had climbed since the initial OPEC+ production cut agreement in April (as well as the recent easing of lockdowns) the long road to recovery from Covid-19 appears to weighing on the minds of investors.

Cailin Birch, global economist at The Economist Intelligence Unit, explains:

The global economy is still in a precarious position. The dip in oil prices in recent days most likely reflects the end of the price boost that came from the initial economic re-opening.

The global economy is now settling in for a long, slow recovery process, which we only expect to pick up in late 2021, assuming a Covid-19 vaccine becomes available then.

Global energy consumption will remain depressed compared with the start of 2020, particularly as demand for travel and hospitality services stays weak. This will require continued production restraint from OPEC+ partners in order to stabilise oil prices around their current level of US$40/b.

Boris Johnson has further quashed any hopes of pubs and the wide hospitality industry re-opening this month, saying at PMQ’s that the government was sticking to its plan to hold out until at least 4 July.

You’ll remember that there were rumours that there might be an early re-opening of beer gardens around 22 June.

Johnson said that guidance for the hospitality industry was being development but there were still risks, and that the government did not want to se a mass of people who could further spread the coronavirus.

The US dollar is trading at three-month lows ahead of the conclusion of the US Fed meeting later today.

While we’re not expecting any change to interest rates, all eyes are turning to economic projections, particularly in light of the surprise drop in unemployment in May.

Michael Hewson, chief market analyst at CMC Markets UK, says:

The economic projections will be particularly instructive in the context of whether Fed policymakers believe a v-shaped recovery is likely, and whether they think the worst is behind the US economy.

We’ve already seen more details this week of the Main Street Lending program, however it will be on how the Fed intends to manage the recovery process that will be of most interest.

Prime Minister Boris Johnson is currently facing Labour leader Kier Starmer at PMQs.

You can follow those proceedings at our politics live blog here:

Speaking of Germany, there are reports that the country’s finance minister Olaf Scholz is mulling a larger-than-expected extra budget that will involved taking on €50bn worth of fresh debt to fund a coronavirus stimulus package.

The cabinet is planning to pass a second supplementary budget on 17 June, according to Reuters, which is citing an unnamed senior official with knowledge of the discussions.

It would be on top of a supplementary budget worth €156bn agreed in March, and would bring the federal government’s overall net new borrowing beyond €200bn this year.

After a relatively positive start to the session, it’s a sea of red across European stocks.

Germany’s XETRA DAX is logging the worst losses, down -9%.

The UK government has weighed in on the OECD forecasts (but failed to address the fact that the UK is likely to suffer the worst Covid-19 damage among its peers).

Chancellor of the Exchequer, Rishi Sunak, said:

In common with many other economies around the world, we’re seeing the significant impact of coronavirus on our country and our economy. I’ve been clear that our top priority has always been to support people, jobs and businesses through this crisis- and this is what we’ve done.

The unprecedented action we’ve taken to provide lifelines that help people and businesses through the economic disruption will ensure our economic recovery is as strong and as swift as possible.

And if you’ve forgotten about the looming Brexit transition period deadline:

The OECD has said that if the UK fails to strike a trade deal with the EU by the end of 2020 or put in place alternative arrangements, Brexit threatens to have a strongly negative effect on trade and job in the UK. That’s being reported by Reuters.

Sir Martin Sorrell is fond of coining a phrase to describe the shape of an economic recovery and his latest prediction is that the world is likely to emerge from the coronavirus pandemic in a “reverse square root”, Mark Sweney writes.

Sorrell, who famously labelled last decade’s advertising recession as “bath shaped”, said that while industry sectors will have their own recovery shapes - V, U, L and even “a chair” - the overall global economy is likely to reset at a lower level.

“The best analogy I like is the reverse square root,” he said, speaking at the virtual CogX conference.

“A sharp fall, a recovery, but maybe not to the levels we were at before.”

The former chief of WPP has always had a hectic globe trotting schedule but, perhaps surprisingly, he says he is enjoying the shift to remote working under lockdown.

“I feel much better physically and mentally not rushing around the world,” he said.

Sorrell quipped that as the business world moves to less face-to-face meetings, and travel is curtailed, post-coronavirus it was unlikely that his son’s joke that he would pass away “in seat 1A” was now likely to come true.

There has been a surge in the number of people looking for a place to rent in London and the home counties since the UK housing market reopened about a month ago, my colleague Julia Kollewe writes.

The lettings market has bounced back faster than the home sales market, according to the upmarket estate agent Knight Frank. It says that the number of valuation appraisals for lettings properties jumped to a record high in the week to 6 June, and was 19% above the five-year average. The weekly number of tenants looking to move was 40% above the five-year average.

House moves and physical viewings were effectively banned between late March and 13 May, when restrictions were lifted. Estate agents switched to virtual viewings, but the housing market pretty much ground to a halt.

Knight Frank says the number of viewings for homes to rent was 1% higher than the five-year average in the week to 6 June, even though physical distancing rules remain in place. By comparison, viewings for properties for sale fell 26% in London. Web viewings remain popular, up 33% higher than the five-year average last week, compared to a 12% decline for sales.

Despite the increase, activity in the lettings market is still below where it was during the second half of 2019, when demand was boosted by uncertainty in the sales market because of Brexit.

Jon Reynolds, head of lettings at Knight Frank for the City, east and Riverside region in London, said:

We expect demand to get even stronger when there is more certainty around how universities will be teaching their courses next year.

Those announcements will make a huge difference and demand will be bolstered further as companies reactivate relocation plans that are currently on hold.

An interesting graphic by our team showing how the UK’s economy is on track for the worst performance among its peers:

Sidenote for all your Bank of England geeks: chief economist Andy Haldane has been re-appointed for another three year term on the rate-setting Monetary Policy Committee.

He first joined the MPC in June 2014.

Don’t expect much fanfare on Wall Street at the start of trading.

US futures are showing the S&P down 0.1% and the Dow down 0.2%.

However, there may be some optimism left around tech stocks, with Nasdaq futures up 0.3%.

Even the first line of the OECD report makes for grim reading:

The COVID-19 pandemic is a global health crisis without precedent in living memory. It has triggered the most severe economic recession in nearly a century and is causing enormous damage to people’s health, jobs and well-being.

The decision to publish two separate economic forecasts was due to the fact that the OECD believes there is “little prospect of a vaccine becoming widely available this year.”

It’s a deflating thought, especially as AstraZeneca and partners race ahead with trials of a potential vaccine that they hope will be on track for manufacturing by September.

A second wave of Covid-19 later this year will trigger a return to lockdowns, the OECD said, putting the world economy on track for a worse 7.6% contraction this year, before climbing back 2.8% in 2021.

In that scenario, unemployment in the OECD economies would be more than double the rate prior to the outbreaks, with little recovery in jobs next year, it warned.

You can read the OECD summary here and the outlook here.

(Just a quick note to say that if anyone was patiently waiting for our post on German unemployment or Eurozone PMI data as outlined in the agenda this morning, it actually isn’t due today but was out last week. Apologies. The agenda has since been updated)

Britain’s economy is likely to suffer the worst damage from the Covid-19 crisis of any country in the developed world, according to a report by Organisation for Economic Co-operation and Development, Phillip Inman writes.

A slump in the UK’s national income of 11.5% during 2020 will outstrip the falls suffered by France, Italy, Spain and Germany, the Paris-based thinktank said.

Germany’s decline in national income (GDP) will be 6.6% this year while Spain’s GDP will fall by 11.1%, Italy’s by 11.3 and France’s by 11.4%.

Highlighting the task awaiting the UK government as it seeks to ease the lockdown, the OECD ruled out a V-shaped recovery for the global economy, saying the path back to previous levels of activity would be hampered by long-lasting effects of the pandemic.

The forecast of an 11.5% drop in GDP this year is an improvement on the 14% fall in national income put forward last month as a likely “scenario” by the Bank of England, but will add to pressure on the government after the OECD found that even countries that have come under severe criticism for their handling of the pandemic will fare better than the UK.

You can watch the live OECD press conference here:

The US secretary of state, Mike Pompeo, has criticised the British bank HSBC for supporting China’s move to end Hong Kong’s autonomy, calling it a “corporate kowtow”.

Pompeo said the US was ready to assist Britain with whatever it needed after Beijing reportedly threatened to punish HSBC and break its commitments to build nuclear power plants in the country if the UK did not allow the Chinese technology firm Huawei to build its 5G network.

“The United States stands with our allies and partners against the Chinese Communist party’s coercive bullying tactics,” Pompeo said in a statement.

He added that displays of support for Beijing received little in return, although the Chinese government “continues to use the bank’s business in China as political leverage against London”.

Pompeo said China’s treatment of HSBC was a “cautionary tale” and referred to the bank’s Asia Pacific chief executive Peter Wong’s decision to sign a petition supporting Beijing’s plans to enact new security legislation in Hong Kong:

The CCP’s browbeating of HSBC, in particular, should serve as a cautionary tale. Just last week, the bank’s Asia-Pacific CEO, Peter Wong, a member of the Chinese People’s Political Consultative Conference, signed a petition supporting Beijing’s disastrous decision to destroy Hong Kong’s autonomy and to break commitments made in an U.N.-registered treaty.

That show of fealty seems to have earned HSBC little respect in Beijing, which continues to use the bank’s business in China as political leverage against London.

Let’s catch up with some of the Chinese inflation data released overnight which has also weighed on Asian stocks.

Both the consumer price index and producer price index figures pointed to a drop in demand last month.

Chinese consumer price inflation came in at 2.4% for May, below forecasts for 2.7% and Aprils’ reading of 3.3%.

The producer price index, meanwhile, came in at -3.7% against consensus estimates for -3.3%, and worse than the a month earlier when it came in at -3.1%.

The Heng Seng fell 0.1% on Wednesday and the Shanghai Stock Exchange posted a near 0.4% loss.

But Robert Alster, head of investment services at wealth manager Close Brothers Asset Management, said there were some indications of a further rebound:

China was ground-zero for the outbreak of the coronavirus crisis, but it also appears to be leading the global recovery. Auto sales data looks to be strengthening, and with some factory levels almost back to pre-pandemic levels there is a real hope that the worst is in the rear-view mirror.

Its role at the heart of the global economy has meant that Chinese inflation has historically acted as an indicator for other countries. It remains to be seen whether that’s still the case in this new environment, where local effects will play a more prominent role in the basket of goods.

Hurdles remain for the global recovery, with recent reports that logjams could be on the horizon for the shipping industry and emerging economies projected to shrink for the first time in sixty years. But as the US shows signs of greater bouncebackability, governments and central banks around the world will have their fingers crossed that a v-shaped recovery could be on the cards.”

The owner of dozens of magazines including The Week, Minecraft World and Viz has put a quarter of its UK staff into a redundancy consultation process as the coronavirus crisis hammers the publishing industry, the Guardian’s Mark Sweney writes.

Dennis Publishing, the company founded by the late media entrepreneur Felix Dennis, has begun a consultation process with 122 of its approximately 480 UK staff. The company is understood to be seeking to cut just over half of those staff involved in the consultation.

The company, which was sold to private equity group Exponent two years ago for £166m, has a portfolio of titles mainly in the technology, fitness and cycling sectors. Brands range from Cyclist and Expert Reviews to Fortean Times and an unofficial guide to global phenomenon Fortnite.

A spokesman for the company said:

The impact of Covid-19 has been significant for the publishing sector.As a result, this week we will begin a redundancy consultation process here in the UK.

We are fully committed to supporting employees in impacted groups throughout this period and ensuring that this process is fair and transparent.

European stock markets are open for trading.

While we’re nowhere near some of the gains we’ve seen in recent weeks, all major indices are in positive territory:

• FTSE 100 is up 0.3%
• France’s Cac 40 is up 0.6%
• Spain’s IBEX is up 0.36%
• Germany’s XETRA DAX is up 0.8%