The five-year Government of Canada yield has climbed 21 basis points off its August low to a five-week high, and the CPI print due this morning could push it further.

The Bank of Canada held for a seventh straight decision while Fed hike odds climbed past seventy per cent, both reacting to the same barrel of oil that also pulled the TSX to a six-week low even as Canadian energy names rallied around it.

The Bank of Canada held at 2.25 per cent on September 2 while U.S. futures markets now price roughly seventy per cent odds the Federal Reserve hikes on September 16. Twelve months ago the two banks were cutting in lockstep.

The overnight rate stayed at 2.25% on Tuesday, the longest hold streak of the cutting cycle. Governor Tiff Macklem says tariffs are a modest inflation risk. The bigger one is sitting in the Strait of Hormuz.

The unemployment rate held at 6.4% only because the participation rate slipped alongside it, landing squarely against Governor Macklem's new willingness to raise rates more than once if inflation persists.

Inflation has risen in three of the last four months while the policy rate has not moved since October, narrowing the gap between where rates sit and where the Bank's own target requires them to be.

A hawkish hold moved the loonie by six hundredths of a cent. Gold, silver and the TSX miners moved on something else entirely: a second wave of US strikes on Iran and Iranian retaliation across the region.

Governor Macklem has attached explicit oil-price conditionality to the next rate move, while markets are pricing almost none of it.

July CPI came in at 3.0%, above target and rising, while an escalating trade war argues for cuts. Wednesday's decision resolves nothing; it just picks which risk the Bank tolerates longer.

A hold at 2.25% is the consensus call for September 2. The weekend's US-Iran exchange revives the same energy-price mechanism that pushed headline inflation to a war-era peak in May.

Statistics Canada releases second quarter GDP this morning, but the Bank of Canada's September 2 decision was already close to locked in before the data arrived.

Canada's 10-year yield eased to 3.65% from a 26-month high as trade war escalation overrode a 75,000-job July gain in shaping expectations ahead of the Bank of Canada's September 2 decision.

Bond markets price next Wednesday's Bank of Canada decision as a near certainty. The consequential rate event is three days earlier, when Fed Chair Kevin Warsh delivers his first Jackson Hole keynote.

GDP, jobs, and inflation all point toward tightening. Two unresolved events landing within days of the September 2 decision explain why the Bank moves last, not first.

The BoC's overnight rate has sat at 2.25 percent for six straight meetings, but the Government of Canada 10-year yield has climbed 34 basis points in the same window, driven by a US bond market the Bank of Canada does not control.

Headline CPI accelerated to 3.0 percent in July while core inflation barely moved, and the Federal Reserve's July minutes showed hawkish sentiment running deeper than the three known dissents.