The yield on Canada’s 10-year government bond hovered around 3.48%, as rising oil prices, driven by ongoing uncertainty in the Middle East, kept upward pressure on inflation. US–Iran talks have stalled, and despite mixed signals on a possible resumption, the Strait of Hormuz remains largely closed, further fuelling price pressures. Recent data underscored this trend: Canada’s headline producer price index rose 2.4% month-on-month in March, well above the 1.6% forecast, while raw materials prices surged 12%, the sharpest increase since 2020. Earlier figures also showed annual consumer inflation accelerating by 0.6 percentage points to 2.4%, in line with Bank of Canada warnings that higher energy costs are lifting inflation expectations. The Bank of Canada is widely expected to hold rates steady at this week’s meeting, though markets remain split on whether it will signal a potential hike or an extended pause for the rest of the year.

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