(Bloomberg) — European stocks declined and U.S. futures erased gains as a grim economic forecast by the OECD undercut market optimism. The dollar slipped.Travel companies and carmakers led the reversal on the Stoxx Europe 600 index. Contracts on the S&P 500 and Dow Jones Industrial Average edged lower after after the international group forecast a 6% contraction in the global economy this year. America’s top infectious-disease specialist, Anthony Fauci, added to the unease with a warning that the coronavirus outbreak is far from over. Treasuries extended earlier gains. Crude oil retreated.The OECD’s assessment brought home that the economic hit from the pandemic may be deeper than anticipated, even after U.S. employment numbers seemed to signal a recovery was under way in the world’s biggest economy. While the Fed is expected to keep its benchmark interest rate unchanged, investors will be looking for reassurance on the central bank’s willingness to keep providing extraordinary support for the economy. Policy makers may also comment on potentially targeting yields for some Treasury maturities.“Markets have been cautious before the Fed meeting and technical indicators are stretched after the recent powerful rally,” strategists at Credit Agricole CIB led by Jean-Francois Paren said in a client note. “For now, it sounds like yield-curve control is the necessary condition for markets to further rally, but it may not be sufficient by itself as it also highlights the fragility of the system we are now living in.”What to watch this week:The Fed’s next policy decision is Wednesday. Officials are expected to leave rates above zero.Euro-area finance ministers meet Thursday to discuss the EU’s recovery package and Eurogroup presidency succession.These are some of the main moves in markets:StocksThe Stoxx Europe 600 Index fell 0.3% as of 10:58 a.m. London time.Futures on the S&P 500 Index slipped 0.1%.The MSCI Asia Pacific Index increased 0.4%.CurrenciesThe Bloomberg Dollar Spot Index sank 0.4%.The euro gained 0.2% to $1.1360.The British pound advanced 0.2% to $1.2752.The Japanese yen strengthened 0.4% to 107.36 per dollar.BondsThe yield on 10-year Treasuries dipped three basis points to 0.80%.Germany’s 10-year yield declined two basis points to -0.33%.Britain’s 10-year yield fell two basis points to 0.32%.CommoditiesBrent crude decreased 2.4% to $38.02 a barrel.Gold strengthened 0.2% to $1,718.11 an ounce.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
