US stocks are inching higher, while European markets are in the red (the UK’s FTSE 100 index has lost 0.2% while Germany’s Dax is down 0.55%), with investors waiting for US inflation data tomorrow.

In Europe, travel stocks rose, led by Air France KLM, Lufthansa and British Airways owner IAG after the European parliament approved vaccine passports to ease summer travel and the US relaxed travel recommendations on 110 countries and territories, including Japan ahead of the Olympics.

US bond yields touched their lowest levels in a month, on expectations that the US Federal Reserve is still some way off from scaling back its massive economic stimulus programme.

Andrew Hunter, senior US economist at Capital Economics, says:

Fed officials may finally begin ‘talking about talking about’ tapering their asset purchases at next week’s FOMC meeting. But with recent data leaving the economy still some way from making “substantial further progress” towards the Fed’s full employment goal, we suspect that taper won’t begin until early next year.

The European Central Bank is expected to stick to its current bond purchase programme at its policy meeting tomorrow, despite rising price pressures.

Emmanuel Cau, European equity strategist at Barclays, says:

Inflation is creating uncertainty about what central banks will do or say going forward. We think central banks will be patient, but we also believe that an adjustment in communication about inflation and policy changes will start in the summer.

Oil prices have rallied, rising to a two-year high (Brent crude) and a near-three-year high for US West Texas Intermediate crude.

In China, inflation has increased, stoking fears of rising inflationary pressure in the global economy. The headline consumer prices index rose to an annual rate of 1.3% in May from 0.9% in April, while producer prices surged by 9%.

The Bank of England’s chief economist Andy Haldane said this morning there were already “some pretty punchy pressures on prices” and this could prompt the central bank to rein in its massive stimulus programme at some point.

And El Salvador has become the first country to adopt Bitcoin as legal tender.

The UK competition regulator is investigating whether British Airways and Ryanair broke consumer law by failing to offer customers refunds for flights they could not legally take because of coronavirus restrictions.

Britain will seek to exclude the City of London’s financial services companies from a global tax overhaul targeting the world’s most profitable businesses agreed between G7 finance ministers last weekend.

Thank you for reading. We’ll be back tomorrow. Good-bye, and enjoy the sunshine! - JK

Britain’s housing market is booming. About 704,000 homes are marked ‘Sold Subject to Contract’ and currently going through the sales process, the highest number the property website Rightmove has recorded over the past ten years and 78% higher than in May 2019.

Its research among buyers expecting to benefit from the stamp duty holiday has found only 4% would abandon their plans to buy a property if they missed either the June or September deadline in England.

• Over half (53%) said they would go ahead as planned
• One in four (25%) said they would try to renegotiate the price with the seller
• 13% said they would plan to buy a cheaper home

The research also shows that the stamp duty holiday is not the biggest motivator for moving. Only 29% of this group said they expected to complete in time to make use of the stamp duty holiday. The most common reasons for property purchases are to move to a bigger home, if someone comes across the right property, relocating to the countryside or the coast, and moving to a home with a garden.

Tim Bannister, Rightmove’s director of property data, says:

The easing of restrictions, extended stamp duty holiday, better mortgage availability for first-time buyers, race for space and relocation plans have all combined to create the biggest conveyancing logjam we’ve ever recorded over the past ten years. We really hope those who had at least four months to make it through to completion will make it in time to beat the first stamp duty deadline, but with the tapering until September many will still make some savings so all will not be lost.

The pace of properties coming on and off the market is also the quickest we’ve recorded, and agents are telling me they have multiple viewings followed by a number of offers within days of a property first appearing on Rightmove. At the start of this year we had anticipated a quieter second quarter of the year, but buyer demand and the pipeline has continued at pace, making it an incredibly busy time for agents and conveyancers in many areas right now.

Oil prices are rallying again today, boosted by expectations of strong demand for crude in western economies as they recover from the coronavirus pandemic. The prospect of Iranian crude exports returning faded as the US secretary of state said sanctions against Tehran were unlikely to be lifted.

Brent crude, the global benchmark, rose to $72.83 a barrel earlier, the highest since May 2019, and is now trading 25 cents higher at $72.47 a barrel.

US West Texas Intermediate crude reached a near-three-year high of $70.62, and is currently up 21 cents at $70.26 a barrel.

Analysts at PVM Oil Associates said:

The widespread faith that oil demand growth will trend significantly higher in the second half of the year is paving the way forward for the price rally.

El Salvador has become the first country to adopt bitcoin as legal tender.

Lawmakers in the Central American country’s Congress voted by a “supermajority” in favour of the Bitcoin Law, which received 62 out of 84 votes. Bitcoin rose 5% shortly after the vote, and is now trading 1.3% higher at $34,068.

The country’s president tweeted:

Travel stocks are up this morning after the EU parliament approved vaccine passports to ease travel this summer. This has boosted the Anglo-German tour operator Tui, along with airlines IAG, the BA owner (up 2.1%), easyJet (up 1.3%) and Ryanair (up 1%). Intercontinental Hotels Group and Premier Inn owner Whitbread are also higher, by 1% and 0.5% respectively.

Neil Wilson, chief market analyst at Markets.com, says:

Meanwhile, the US eased travel restrictions for 61 countries, but not the UK. Nevertheless, there is a real sense that vaccines are working to open up the US, EU and UK to travel this summer, albeit not quite how it once was.

The owner of the baguette chain Upper Crust, SSP, has fallen deep into the red as it was hammered by the slump in travel over the past year due to the coronavirus crisis.

The London-based snack food group, whose outlets are at train stations and airports, made a pre-tax loss of £300m in the year to 31 March, up sharply from the previous year’s £34m loss. Like-for-like sales crashed 79% as as far fewer people travelled over the past year.

Like other travel and hospitality firms, SSP has been hit hard by the pandemic. It shut 2,500 outlets, put 22,000 people globally on furlough at the peak and slashed 14,000 jobs.

Things are slowly improving, with 1,150 outlets open at the moment. The company expects to have up to 1,500 open over the summer, and says it has seen a gradual recovery in passenger numbers, mainly in the UK and US. In the first week of June, sales were still down 70% versus 2019, however. Like-for-like revenues are not expected to recover to pre-Covid levels until 2024.

Simon Smith, the SSP chief executive, says:

The recovery in domestic and leisure travel has now begun in a number of our territories, and our teams are busy re-opening units in line with passenger demand.

Prior to the pandemic, SSP served one and a half million customers every day at 180 airports and 300 rail stations in 35 countries around the world and operated more than 550 international, national and local brands.

The Bank of England’s chief economist Andy Haldane said this morning there were already “some pretty punchy pressures on prices” and this could prompt the central bank to rein in its massive stimulus programme at some point.

He told LBC radio:

We could start tightening the tap on that, slowing down the amount of money we’re printing, and ultimately, perhaps even starting to turn that around.

Haldane is due to leave the Bank later this month. He voted in May to reduce the size of the central bank’s bond-buying programme, known as quantitative easing (or money printing).

Yesterday, he said Britain’s housing market was “on fire” and that the recent rise in house prices – which topped 10% over the 12 months to March 2021, according to official data – was very likely to worsen inequality.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The UK’s competition watchdog has launched action against British Airways and Ryanair over their refusal to give refunds to people during UK lockdowns, when they were “lawfully unable to fly” due to travel bans and restrictions imposed by the government.

BA offered vouchers or rebooking and Ryanair only the option to rebook. The Competition and Markets Authority started an investigation in December.

It said this morning that it is “concerned that, by failing to offer people their money back, both firms may have breached consumer law and left people unfairly out of pocket. It is now seeking to resolve these concerns with the companies, which may include seeking refunds, or other redress, for affected customers”.

This relates to “periods when it was unlawful in one or more parts of the UK for people to travel for non-essential reasons. It covers flights that were not cancelled, and does not cover any other situations”.

Andrea Coscelli, chief executive of the CMA, said:

While we understand that airlines have had a tough time during the pandemic, people should not be left unfairly out of pocket for following the law.

Customers booked these flights in good faith and were legally unable to take them due to circumstances entirely outside of their control. We believe these people should have been offered their money back.

In China, inflation has increased, stoking fears of rising inflationary pressure in the global economy. The headline consumer prices index rose to an annual rate of 1.3% in May from 0.9% in April.

ING economist Iris Pang explains:

Consumer prices continued to be affected by last year’s high pork prices, which started to come down in May last year. As such the high base effect from now will dissipate, and therefore we will see CPI edging higher from now on.

More eye catching was a 9% annual surge in factory gate prices, up from 6.8% in April and the highest since 2008, driven by ferrous metals. They have jumped since the end of last year when they were falling by 0.4%.

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

While some of the rise can be attributed to base effects due to the huge slide in commodity prices that we saw in March and April last year which saw producer prices decline 3.7%, there is increasing evidence that various supply side issues are starting to create a situation where rather than being transitory, inflation pressures could become more persistent. It is certainly something Chinese business is becoming more concerned about, along with Chinese authorities given recent steps to curb the recent sharp rise in commodity prices.

This is a situation that central bankers appear to be remarkably relaxed or complacent about, depending on which side of the fence you happen to be on.

Trade figures for Germany just out show a 0.3% rise in exports in April while imports were down 1.7%. Germany exported goods to the value of €111.8bn and imported goods worth €96.3bn, the Federal Statistical Office (Destatis) reports.

Compared with April 2020, exports increased by 47.7%, and imports by 33.2%. This means Germany’s trade surplus improved to €15.5bn compared with €3.4bn a year earlier.

Germany’s exports to the UK jumped 64% to €5.3bn in April, after declines in the previous month, while imports fell by 0.6% to €3.1bn.

Asian stock markets are down, with Japan’s Nikkei losing 0.3% and Hong Kong’s Hang Seng slipping 0.2%. European stocks are expected to open flat to slightly higher while the UK’s FTSE 100 could dip at the open.

The Agenda

• 2.30pm BST: UK Treasury Committee pre-commencement hearings for appointments to the Bank of England’s Prudential Regulation Committee and Financial Policy Committee: Tanya Castell (PRC) and Carolyn Wilkins (FPC)