Cash is king again...here's why
episodePreviously titled “Cash in king again...here's why” — renamed by the publisher on Sep 22, 2026
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Why is cash now beating total bond returns and offering near‑5% risk‑free yields?
Hello and welcome to the Australians Money Puzzle Podcast. I'm James Kirby. Welcome aboard, everybody. Now I imagine if you're an active investor Probably find each passing month your returns from the share markets, they're literally getting better all the time. But also perhaps these very lucrative returns from Share markets are a little alarming. And by that I mean something has to crack, right? It just can't keep going as good as this. And what has happened in our own market already, of course, is that property prices have started to fall. But now for enlisted investment markets we have reached a crucial point. That is the five percent US Treasury bond yield rate, the long-term bonds. This is a benchmark for the world, and it means that rates are going to be higher.
All around the world and here in our own market we have local dynamics, but they are the same. We are going to have higher rates. So really we are looking at a world which is quite different. High rates, high returns. How do you invest in this market? My guest today is Will Hamilton of Hamilton Wealth Partners. How are you, Will? Very well, James. Thank you for having me. We won't go too deep into bonds because basically I think people actually turn off when they hear the word bonds. And I understand that. But we need to just put it on the table that you would have thought if rates were rising all the time, then The bond market is not great, right? It it just doesn't do well when rates are rising, very broadly, and rates are rising and rising and bonds are doing badly and badly.
It seems to me three percent a year or so. Why would anyone bother with them when you can get four and a half percent cash? Government guaranteed.
When bonds sell off, so the yields go up, the value of a bond decreases. You are right. When you can get four and a half to five percent, why would you be chasing a bond at these levels? But it's the implications of this sell-off in bonds, which I think is the big thing. So higher bond yields push up borrowing costs. Things like mortgage rates are priced off the 10-year bond, despite the fact that fact that you get the U.S. President wanting the the short term official cash rate to be lower. And he says because that's going to lead to lower mortgages. The U.S. mortgage, like the Australian mortgage market, are priced off the ten year bond. So it when bonds sell off or yields go higher, that's what happens when they sell off, borrowing costs for businesses and households therefore increase.
It puts more indebted parts of the economy under pressure. So it increases therefore the relative attractiveness of bonds as well against equities. But it's to what extent is that backed in and to what extent are you going to see further increased rates at the short end? And therefore, what will that do to bonds?
And does it increase the attractiveness of cash? It would seem to me if I'm getting four and a half percent cash, easy, at coal, no risk. Then I want a lot more return for my shares.
Correct. And To what extent? So, like we saw, I think it was eight increase interest rate increases, wasn't it, in beginning of 2022? And The market's factoring in in the US, talking about in the US here, two to three. So they're factoring that in. I'm not that worried about two to three. But what I would be worried about is if you got six.
Explain that a little bit more to the listeners, because this is crucial, right? This is the signal to the world. Just explain
what you mean. So let's assume each one's twenty-five basis points. So six is one and a half percent. So one and a half percent increase in US cash rates from here is very significant. The market's saying Two to three, so fifth to half a percent to three quarters of a percent. Yeah, but and I think that look the market's done ext the equity markets are done exceptionally well. You've got US deficit, you've got a oil price as a result of the Iran conflict, you've got AI demand for debt. And don't forget the Ukraine conflict out there as well, just to throw that in.
How do higher global interest rates affect borrowing costs and mortgage rates?
And through it all, their shares keep producing terrific returns.
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Chapters
8 chapters
1
Why is cash now beating total bond returns and offering near‑5% risk‑free yields?
0:09–4:14
2
How do higher global interest rates affect borrowing costs and mortgage rates?
4:14–8:40
3
What are the risks and opportunities of investing in a high‑rate, high‑return market?
8:40–13:04
4
Why is private credit considered a trap on the wrong side of the rate cycle?
13:04–17:55
5
How does infrastructure investment perform when rates are rising?
17:55–22:03
6
What impact does the AI boom have on global share‑market returns?
22:03–25:55
7
How should investors approach cash, equities, and REITs in today’s high‑rate environment?
25:55–30:20
8
What are the key takeaways for everyday investors from this high‑interest‑rate era?
30:20–33:46