Deposits can hedge or amplify bank rate risk depending on depositor attention
Deposits shape banks’ exposure to policy moves in a way that depends on how much depositors monitor and react to rates.
A CEPR study argues that deposit inattention can both hedge and amplify banks’ interest-rate risk, with the duration of the deposit franchise value flipping from negative to positive as rates rise. The analysis links the deposit franchise value to how much policy-rate changes pass through to deposit pricing, and to banks’ expectations about future profitability.
Key findings suggest that when the policy rate is low, banks tend to keep deposit rates at or near zero, which can produce a negative DFV duration as rates move. As rates rise, banks may start paying positive deposit rates to retain customers, which can increase the sensitivity of deposits to policy actions and alter future profitability. The paper also stresses that a bank’s deposit base is not a uniform block; inattention is concentrated among particular depositor segments and can change with technology and switching costs.
Micro-evidence cited in the work shows that slow reactions to unscheduled inflows, such as tax refunds, correspond to diminished responsiveness to rate moves around FOMC announcements. The implication for policy and supervision is that the stability of deposit funding depends on the behavioural heterogeneity of depositors, not solely on macroeconomic conditions. The authors call for more granular data on depositor activity and for consideration of how digital banking platforms might alter stickiness and competition among banks.
Policy relevance is central: if depositor inattention reduces pass-through to deposits, conventional transmission channels through which central banks influence borrowing costs may weaken. Conversely, if attention increases, banks may adjust more rapidly to rate shocks, affecting the effectiveness of monetary policy and the risk profile of banks. The debate about deposit betas and long-run risk remains conditional on rate trajectories, bank competitive dynamics, and the evolution of deposit-monitoring technologies.
The study does not provide a single verdict on whether deposits hedge or amplify risk; instead it highlights a state-dependent mechanism that can shift with the interest-rate cycle. The researchers emphasise that deposit franchise value is a critical, but imperfect, guide to understanding how policy actions propagate through the funding side of banks. Further empirical work, especially with micro-level depositor data, will be needed to quantify the practical impact on specific banks.
New Zealand braces for more flooding after road collapses, one death
Severe floods on New Zealand’s North Island raise risks for households and regional economies as a low-pressure system lingers.
Forecasts warn of continuing downpours and gale conditions with the potential to worsen river conditions and trigger further slips. The weather bureau flagged danger to life in the affected districts, while officials reported that emergency declarations remain in place and power restoration is a work in progress. The broader implication is disruption to regional activity, with thousands of properties without power and ongoing damage to infrastructure.
Local authorities have been mobilising geotechnical teams to assess road stability and land movement, particularly in agricultural areas south of Auckland. The scale of outages complicates recovery efforts and could dampen economic activity in the affected districts while forecasts suggest a slow easing on Monday. Utility companies warned that full power restoration could take time, which may prolong the disruption to households, farms and businesses reliant on the grid.
Emergency management officials emphasise the importance of timely forecasts and coordinated responses as weather patterns remain unsettled. The immediate focus is safeguarding residents in flood-prone areas, ensuring access for relief crews, and maintaining critical services such as electricity and communications. As conditions evolve, attention will turn to insurance implications, structural resilience and the cost of repairs to transport networks.
In the longer run, the event underscores the vulnerability of infrastructure to extreme weather, a risk profile that has become more salient in regions exposed to intensifying rainfall and river flow. Authorities are likely to review flood defences, drainage capacity, and the resilience of rural roads and power lines. The economic impact will hinge on how quickly power is restored, how transport links recover and how local authorities support households and small businesses through the disruption.
UK oil and gas near collapse under windfall tax and transition pressures
The UK oil and gas industry is described as marginal or near-irrelevant as policy and transition dynamics squeeze output and investment.
Industry observers note a steep decline from a peak of around 4.4 million boe per day to about 1 million boe per day, with projections suggesting output could fall to 150,000 barrels per day by mid-century if current trajectories persist. Tax receipts from the sector have shrunk to about 4.5 billion pounds in 2024-25, reflecting a broader shift away from hydrocarbons and toward wind and solar.
The narrative raises questions about energy security, regional competitiveness with peers such as Norway, and the long-term fiscal design of the North Sea regime. Regulators have signalled a reassessment of North Sea support and transition planning as investment slows and exploration wells decline. Some analysts argue for more nuanced approaches to maintain domestic capability while accelerating the energy transition, while others warn that continued policy tightening could deter new projects and erode tax receipts further.
Investors and industry players are watching exploratory activity, regulatory signals, and corporate investment plans as government policy evolves. The balance between decarbonisation aims and the practical needs of energy security will shape future decisions on licensing, fiscal terms, and incentives for regional development. The debate reflects a broader tension between climate objectives and the economic implications for a country that has historically relied on oil and gas incomes.
Venezuela oil revival under sanctions relief and licensing deals
Sanctions-relief measures and US-backed licensing could restart Venezuelan drilling and services markets, drawing in major oilfield firms.
Ensign Energy Services has maintained a presence in Venezuela, with one rig already restarted and a second expected to return by the end of 2025, signalling a potential first wave of revived activity. Caracas plans to award new exploration and production blocks to Chevron and Repsol under a US-backed initiative to revive the oil sector, with production potentially increasing by as much as 30 per cent in 18-24 months.
The developments could rekindle interest from Halliburton and SLB, subject to licensing conditions and regulatory clarity. The revival would address servicing and technology gaps that have long constrained Venezuelan operations while testing the boundaries of sanctions regimes and licensing frameworks. Analysts caution that success hinges on continued political reforms, stable access to capital, and reliable payment flows, all of which remain uncertain.
Monitoring of licensing decisions and new service contracts will be essential to gauge the pace and scale of any revival. The trajectory could reshape Venezuela’s role in global oil markets, particularly if 18-24 month production targets begin to materialise and if US-backed investment aligns with broader policy shifts. Observers will also watch for institutional changes that could bolster or undermine the licensing regime and the return of major oilfield players.
Hapag-Lloyd in advanced talks to buy ZIM, creating a top-4 global liner
A potential merger between two major container lines could realign global shipping, with implications for routes, pricing and geopolitical exposure.
Hapag-Lloyd is reported to be in advanced talks to acquire ZIM for more than $4 billion, with ZIM set to delist from the NYSE and restructuring via Israeli-backed holdings. The deal would reshape the top tier of global liner capacity, potentially moving the combined entity into the number-four position behind the industry leaders. The arrangement would preserve Israel-linked operations while transferring international hulls and routes to the buyer, raising questions about strategic control and regulatory approvals.
The transaction underscores how the container shipping sector is evolving amid geopolitical risk and sanctions considerations. A closer tie between an established European carrier and a sovereign-linked Israeli vehicle could influence capacity allocation, pricing power, and resilience to disruption. The regulatory hurdle will be high, with antitrust review likely and possible reactions from unions and customers dependent on service continuity and rate structures.
If the deal proceeds, the merged group will need to navigate port-state controls, labour agreements, and fleet integration challenges. The fate of ZIM’s fleet and routes under Hapag-Lloyd could determine the timing and mechanics of route rationalisation, while broader market signals will indicate whether this is a consolidation driven by efficiency, security considerations, or a strategic repositioning in a volatile trade environment.
Japan seizes Chinese fishing boat in the EEZ, arrests captain
Maritime friction in East Asia escalates as a Chinese vessel is detained in Japan’s exclusive economic zone and its captain is taken into custody.
The incident occurred after the vessel entered Japan’s EEZ and attempted to evade inspection, prompting the arrest of the captain around 12:23 pm local time. The event comes amid rising tensions between China and Japan and raises questions about the handling of contested waters, patrols near the Senkaku/Diaoyu area, and the risk of further confrontations in the maritime domain.
Diplomatic and security channels will monitor Beijing and Tokyo for any official statements or follow-up actions that could affect ballast, fishing rights, or broader fisheries governance. The incident adds to a pattern of maritime encounters that intersect with regional power dynamics, economic competition for seafood resources, and supply chain considerations that span the Asia-Pacific region.
Observers emphasise the need for clarity on rules of engagement, patrol protocols, and the role of third-party actors in East Asian maritime disputes. Any escalation or deterrence measure-whether diplomatic protests or increased patrols-could impact regional trade routes and the flow of goods through strategic sea lanes.
US intercepts shadow fleet tanker Veronica III amid wide sanctions campaign
The United States has intercepted a Panama-flagged tanker linked to networks associated with Iran and Venezuela, illustrating the reach of sanctions enforcement.
The interception signals the growing reach of sanctions operations and highlights the risk profile for insurers, traders and shipowners involved in sanctioned trades. The vessel’s connections underscore the complexity of illicit flows often described as “shadow fleet” activity and the challenges of enforcing export controls across jurisdictions.
Analysts say these actions contribute to a broader deterrence framework, raising the stakes for compliance and due diligence in physical crude markets. The event could trigger rerouting, cargo displacements and new sanction provisions that reshape risk assessments for counterparties and insurers. Observers will watch for further seizures or legal clarifications that clarify the boundaries of enforcement.
As enforcement extends its footprint, the shipping industry will need to adapt with tighter KYC regimes, improved cargo tracing, and clearer guidelines on acceptable finance and insurances. The evolving sanction landscape increases the cost and complexity of trading in high-risk corridors, with consequences for liquidity and pricing in affected trades.
Ukraine strikes Black Sea port amid peace-talks momentum
Attacks on a Russian Black Sea port continue as ceasefire discussions gain traction, raising concerns about energy logistics and regional stability.
The strike occurred days before expected peace talks and adds a layer of tension to ongoing drone and air attacks that threaten port infrastructure and related energy facilities. The impact on energy logistics-particularly exports from the region and the integrity of energy infrastructure-could influence negotiations and the dynamics of any potential ceasefire.
Analysts warn that continued hostilities near critical transit points could disrupt supply chains in the Black Sea region, affecting regional energy security and pricing. International observers will be watching for shifts in diplomatic language, ceasefire negotiator comments, and any further strikes that might derail talks or alter commitments on demilitarisation and reconstruction.
The incident also raises questions about the resilience of regional energy infrastructure and the capacity of allied assets to secure supply routes during fragile negotiation periods. The broader market signal is one of heightened risk around near-term energy shipments and regional oil and gas flows, particularly in the context of a volatile security environment.