00:02The Reserve Bank's Monetary Policy Board meets on Monday and at half past two on Tuesday the
00:07Governor will announce nothing. No change to interest rates, or at least that's what
00:12every forecaster is forecasting. So if you've got a mortgage, relax. Can you stay relaxed
00:18for the rest of the year? Well 36% relaxed, that's the market odds of rates staying where
00:24they are in 2026, which is to say there's a 64% chance of a hike, followed by roughly
00:30the same chance of a cut next year. But another market is signalling that higher interest rates
00:35are here to stay, the bond market. Investors are demanding 5% interest to buy the Australian
00:42Government's 10-year debt, the most since just after the GFC. Bond yields are rising around
00:48the world, led by the United States. And fundamentally it's due to a collision of massive spending
00:54on AI infrastructure and defence, with historically big government deficits, especially in the
01:01United States. Three other things are making it worse. First, Trump's tariffs are back, between
01:0710 and 12.5% on 60 countries so far. And more than that, America's new protectionism has unleashed
01:14a wave of import restrictions around the world. Basically, globalisation is in retreat, which
01:21means higher prices. Second, the Iran conflict is sending the price of oil higher again. On
01:27top of that, refinery margins, also known as crack spreads, are rising even more than the
01:33basic oil price. And third, global warming is starting to bite, amplified this year by an
01:40El Nino. There are currently some 35,000 bushfires burning around the world, with France the hardest
01:46hit. So fires, floods, drought, tariffs and a blocked Strait of Hormuz are all pushing prices
01:53higher. So is there any good news? Well, yeah, there won't be a rate hike on Tuesday.
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