The Canadian 10-year government bond yield rose toward 3.6% on Friday to reach its highest level since July 2025 as a surge in US Treasury yields amid persistent Middle Eastern tensions overshadowed fleeting relief from a strike postponement. This upward movement mirrored the rise in the US 10-year yield to July 2025 highs driven by pro-inflationary risks and fears that a diplomatic window for negotiations might instead be used for military build-up. While the Bank of Canada maintained its policy rate at 2.25% on March 18th its Governing Council warned that energy price volatility and the potential closure of the Strait of Hormuz maintain higher inflation risks. Domestically the 2026-27 fiscal estimates projecting 502.8 billion in spending including 48.4 billion for national defense have added supply-side pressure to long-term yields. The 10-year benchmark is following a broader rise in global yields as investors brace for at most one rate cut this year from major central banks.