With world's attention on economic woes, China cracks down on Hong Kong; China and Japan launch huge new stimulus; big job losses mount; UST 10yr yield at 0.66%; oil and gold unchanged; NZ$1 = 61.1 USc; TWI-5 = 67.1

Here's our summary of key economic events over the weekend that affect New Zealand, with news Hong Kong's unique free status hangs in the balance today.

But first up today, the OECD sees nothing but red ahead. It said the world's major economies will see their debt-to-GDP ratio rise to near 140% and will add US$17 tln in new debt to their public obligations as sharply declining tax revenues come when emergency borrowing zooms higher.

Two weekend events illustrate the trouble. Hertz declared bankruptcy, and freight-forwarder Kuehne+Nagel said it will cut more than 20,000 jobs. And then there was a uniquely American coronavirus response: mass firings via Zoom by WeightWatchers.

Today's focus is shifting to Hong Kong where Beijing is cracking down with a new security law. That will likely draw an American response by revoking the territory's "special status" under US law, a move that would have far-reaching trade and investment implications. A rapid de-camp to Singapore is the most likely result, one that might effectively weaken China's "Greater Bay Area" initiative. It also drew thousands on to the streets in protest, this time met with Beijing-style aggressive police tactics. Media reporting the protests are facing Beijing's heavy hand.

The Hong Kong stock market closed -5.6% lower on Friday on the news. Shanghai took an almost -2% tumble too. Interestingly, the Singapore market got no bounce, also down by -2.1% yesterday. Messy separations help nobody, it seems.

And China is no longer saying its efforts to unify Taiwan will be 'peaceful'.

However, it looks like China is backing away from "iron ore inspections" that the Australian's were taking as a signal of China's displeasure with them. The sigh of Aussie relief masks the rising restrictions on Aussie agricultural exports to China.

And, as expected, China isn't setting a GDP growth target this year.

But it is rolling out more huge stimulus support. An extra NZ$650 bln will be delivered to local governments with specific instructions that the funds be spent on bolstering employment, upholding basic living standards and supporting private companies, through reductions in rental costs and subsidies for consumption. It will cut taxes and fees by NZ$800 bln. Local governments will raise vast amounts of new debt. They have already raised NZ$325 bln of pandemic related bonds. Now they are being told to raise another NZ$1.2 tln in special-purpose bonds, a level almost double what they raised last year which itself seemed eye-watering back then.

In Japan, they have just rolled out a new NZ$1 tln plan to bolster struggling businesses. Commercial banks are set to receive a credit guarantee of up to 100% on zero-interest, no-security loans to small and medium-sized businesses hit by the pandemic, and backed by their central bank who will lend the banks the necessary funds.

And Japan is about to lift quarantine restrictions in Tokyo and some other parts of Japan as the number of new cases there dives to near-zero.

In a move that took markets by surprise, the Reserve Bank of India cut their benchmark repo rate by -40 basis points to 4.0%, the second cut this year. India is battling a huge surge in unemployment arising from the pandemic. More than 120 mln workers, most of them small traders and daily wage earners, lost jobs in April as economic activity all but ceased after a nationwide lockdown.

In Europe, their car industry is facing mounting job losses. The French Government warned Renault could disappear if it didn't get help soon. And Nissan was considering 20,000 cuts, with many in Europe. And an Indian-owned British car maker is on its knees.

It's coming up to the long Memorial Day weekend in the US, so markets will close until Wednesday our time.

In Australia, there has been an arithmetic error of humourously large proportions - AU$60 bln. A "significant error" in the JobKeeper application form meant that instead of supporting 6.5 mln workers and costing AU$130 bln over six months, that job support program is now expected to support 3.5 mln people and cost AU$70 bln.

The latest compilation of Covid-19 data is here. The global tally is now 5,360,800 and up +192,000 from this time Saturday, which is rising at a faster pace than recently. "Opening up" isn't helping.

Now, just over 30% of all cases globally are in the US, which is up +43,000 since this time Saturday to 1,633,000. This is an unchanged rate of increase. US deaths are now exceed 97,000. Global deaths now exceed 344,000. Canada infection levels are now higher than China's. Brazil is now the second highest infected nation, passing Russia, but both are experiencing surges. The UK surge isn't abating either and it now has three times as many cases as China.

In Australia, there are now 7109 cases (+13 since Saturday), 102 deaths (+1) and a recovery rate of just over 91% (unchanged). 36 people are in hospital there (-6) with 5 in ICU (unchanged). There are now 501 active cases in Australia (-9).

There were no new local cases again yesterday, leaving the total at 1504 identified as either confirmed (1154) or probable (350). Twenty-one people have died here in total. There is still only one person left in hospital with the disease, and they are not in ICU. Our recovery rate is still just under 97%, with only 27 people known to be still fighting the infection here (-1).

The UST 10yr yield will open the week at 0.66% and probably hold this level till Wednesday when Wall Street returns from its Memorial Day holiday weekend. Their 2-10 curve is at +49 bps. Their 1-5 curve is at +17 bps, and their 3m-10yr curve is +56 bps. The Aussie Govt 10yr yield is down -1 bp to 0.87%. The China Govt 10yr is unchanged at 2.61%. And the NZ Govt 10 yr yield is similarly unchanged at 0.62%.

The gold price is little-changed to start the week, down just -US$2 to US$1,733/oz.

Oil prices are soft today, but only marginally. The US crude price is now just over US$33/bbl. The international oil price is just over US$35/bbl.

The Kiwi dollar is a little firmer rising slightly to 61.1 USc and +160 bps higher than this time last week. On the cross rates we are holding at 93.5 AUc and a +100 bps weekly gain. Against the euro we are also holding at 56 euro cents. That means our TWI-5 is now at 67.1 but up +2.2% for the week.

Bitcoin is opening the week softer, down -2.8% to US$8,939 since where we left it on Saturday, and down -7.7% over the past week. The bitcoin rate is charted in the exchange rate set below.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».