The yield on the Canadian 10-year government bond stood at 3.46% on Thursday, extending recent volatility but remaining above its level at the start of the week, as elevated energy prices increased the likelihood of a more hawkish stance from the Bank of Canada. Crude oil and refined product prices rose sharply after commercial vessels transiting the Strait of Hormuz were targeted by both the US and Iran, heightening the risk of prolonged disruptions to tanker traffic in the area. Recent data showed that higher energy costs pushed Canada’s headline producer price index up 2.4% month-over-month in March, surpassing forecasts for a 1.6% increase, while the raw materials price index jumped 12%, its largest gain since 2020. Earlier data for the period had already revealed that annual consumer inflation climbed 0.6 percentage points to 2.4%, in line with Bank of Canada warnings that rising energy prices were feeding into inflation expectations.