This problem is easily solved with a regexp that processes the input as a whole, rather than working on it line by line. I had this need often enough that I exported Go regexp engine as a command line tool regrep, which can insert "elephant" after "baz" with:

  go get github.com/orivej/unix/regrep
  regrep s '(\n( *-) baz\n)' $'$1$2 elephant\n' < input.yaml

It only processes standard input, and can not by itself replace the contents of an input file with its output; but another tool, inplace, helps:

  go get github.com/orivej/unix/inplace
  find . -name '*.yaml' -exec inplace {} regrep s '(\n( *-) baz\n)' $'$1$2 elephant\n' \;