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Metrobank US-Iran Risk Index: Risk-off
High risk levels in markets have favored the US dollar
By Metrobank Research, Investment Counselor Department
Our US-Iran Risk Index settled at 139.3 on March 13, 2026, 2.3% higher than the previous day. This marks a new all-time high for the index.
Brent crude oil prices continued their upward trajectory, closing the day above USD 100 per barrel once again as the Strait of Hormuz, a critical transit point for global oil shipments, remains closed. The benchmark 10-year US Treasury yield also rose marginally as global inflation concerns persisted.
Meanwhile, high risk levels in markets have only reinforced the US dollar’s status as a safe haven, with the currency appreciating even further on Friday. Consequently, the dollar-peso exchange rate closed the trading day at an all-time high of 59.74.
Over the weekend, Iran rejected claims from US President Donald Trump that they are open to holding ceasefire talks with the US. Moreover, President Trump also called upon US allies to help in securing the Strait of Hormuz. With tensions and military attacks continually escalating, there is still no clear end in sight to ongoing Middle East frictions.
As the conflict enters its third week, we expect oil prices to stay elevated around the USD 100+ per barrel level. Furthermore, as domestic inflation accelerates on rising oil prices, we expect the Bangko Sentral ng Pilipinas (BSP) to preemptively end their easing cycle this year. Additionally, investors are likely to remain risk-off as geopolitical and inflationary risks mount, leading to increased dollar strength and, in turn, higher levels for USD/PHP going forward.
Metrobank Research’s US-Iran Risk Index measures the amount of risk that the ongoing conflict presents to financial markets. It considers the general risk sentiment of investors and inflationary pressures brought on by the conflict. A value of 100 denotes a normal level of risk based on market levels prior to the conflict’s escalation, while values greater than 100 imply increasing levels of risk.
What now?
| Asset Class | Outlook | Strategy |
|---|---|---|
| Local Fixed Income | Bearish | Stay defensive on duration. Focus on liquid 2- to 5-year tenors and add only on yield spikes or auction‑driven dislocations. Avoid extending until foreign exchange and geopolitical risks ease. |
| Local Equities | Bearish | Expect bargain-hunting of cheaper names in the near term. However, gains may remain capped amid oil volatility and developments in the Middle East. Buy on dips and take profit in rallies. |
| Global Fixed Income | Bearish | Position in short-dated (up to 5 years) quality bonds as inflation fears push yields upwards. Expect volatile swings as headlines drive market sentiment amid uncertainty. |
| Global Equities | Neutral | Maintain a defensive approach by prioritizing high-dividend sectors while taking advantage of volatility to accumulate select quality-growth names. |
| USD/PHP | Bullish | Buy US dollars on dips or close to support levels at 59.40 and 59.00. Oil prices and safe-haven flows will pressure the peso, though positive news that affect local and global inflation expectations offer potential relief. |
| G10 Currencies / US Dollar | Bearish | The prolonged conflict continues to favor the US dollar over its G10 counterparts, though recovery may be sharp once risk sentiment improves. Major currencies such as the euro, the British pound, and Japanese yen are now at key levels and may see fresh lows if elevated energy prices are sustained. |
| Gold | Bullish | While initially reaching highs of USD 5,400 per troy ounce on safe-haven demand, gold has pared gains after higher oil prices sparked expectations of higher US inflation, delayed US Fed rate cuts, and a stronger US dollar. The precious metal has fallen just slightly below USD 5,000. Any further dip below USD 4,900 and we could see new entry opportunities at the USD 4,800 and USD 4,600 areas. Our long-term view is steady price appreciation as global central banks purchase gold to diversify reserves beyond the US dollar and US Treasuries. |
(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)