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Metrobank US-Iran Risk Index: Conflicting messages

Risks in financial markets tilt to the upside following conflicting statements from the US and Iran on the state of peace talks.

June 2, 2026 by Metrobank Research, Investment Counselor Department

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Metrobank’s US-Iran Risk Index settled at 128.2 on June 1st, 2.6% higher than its value of 125.0 on the prior trading day.

Global oil prices moved higher on news that Iran halted negotiations with the US, despite US President Donald Trump claiming that talks were progressing at a “rapid pace,” according to Reuters.

On top of stalled talks, Reuters also reported that Iran is planning to completely block the Strait of Hormuz. Market players reacted to the contradicting headlines by pricing in heightened risks, with Brent Crude closing at nearly USD 95 per barrel on Monday, UK trading, according to data compiled by Bloomberg.

The benchmark 10-year US Treasury yield also edged slightly higher during US trading. Meanwhile, the US dollar strengthened, as increased uncertainties pushed investors toward the safe haven asset. The dollar-peso exchange rate closed higher at 61.75 on Monday, Philippine trading.

Metrobank sees elevated risk and volatility in the near-term, as US-Iran negotiations remain fragile. Oil prices are poised to stay high, as global supply remains constricted due to the war’s impact on Middle East oil facilities. Consequently, domestic inflation is expected to quicken in the coming months, which may put upward pressure on Philippine bond yields.

Moreover, Metrobank forecasts continued rate hikes by the Bangko Sentral ng Pilipinas (BSP) this year to stem accelerating inflation. Finally, Metrobank expects the dollar-peso exchange rate to stay elevated, as dollar demand weighs on a weak peso.

Metrobank’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 pressure brought 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 within an average duration of 2 to 5 years, as foreign exchange-driven volatility, upcoming bond supply, and potentially more BSP rate hikes may keep the yield curve elevated. While 2- to 3-year yields have settled below their 2018 highs, the 5-year yield still trades flat to the back of the yield curve. Recent auctions show market participants are willing to bid more aggressively to be awarded volume and prevent another rejection.
Local Equities	Neutral	Maintain a cautiously defensive outlook and lean toward banks, defensive names, and high-quality index stocks that could benefit from improved macroeconomic confidence. Stay nimble and consider pullbacks as bargain-hunting opportunities.
Global Fixed Income	Bearish	Maintain a slight underweight in duration, with focus on the 3- to 7-year segment, where carry remains compelling, while limiting exposure to further upside in yields. With US inflation tilting toward the upside, yields are likely to remain elevated, reinforcing a higher-for-longer rate environment. Near-term direction will continue to be shaped by geopolitical developments and inflation expectations.
Global Equities	Slightly Bullish	Maintain a prudent allocation by focusing on sectors with stable earnings and attractive yields, while remaining selective in adding exposure to fundamentally strong companies amid market uncertainty. Elevated geopolitical risks continue to support energy prices through a higher risk premium, which may limit upside potential for global equities in the near term.
USD/PHP	Neutral	Maintain a neutral to mildly bearish stance, with price action expected to remain contained within the 61.40-61.80 range, as repeated rejection near 61.75 continues to cap rallies. Favor fading strength into resistance while selectively building positions on dips. The balanced flows and moderating momentum reinforce consolidation, with mixed macroeconomic signals—softening US sentiment and persistent geopolitical risk—keeping the pair range-bound, with a slight downside bias.
G10 Currencies / US Dollar	Slightly Bullish	While many market players expect a softer dollar, this view is not strongly backed by actual trading activity, so the greenback’s downside may be limited rather than sharp. The currency market may move slowly without a clear upward or downward trend. Currencies that move more with global growth (like AUD, NZD, NOK, and SEK) could perform better, while major pairs like EUR/USD may trade within a narrow range. Given the lack of a strong conviction for a major move, opportunities to buy these growth-sensitive currencies on dips may be better than betting on a big dollar decline.
Gold	Slightly Bullish	Gold has moved below USD 4,500 on recent US-Iran developments. Though Brent Crude has dropped below USD 100, the US Federal Reserve remains hawkish on continued inflationary pressure. Gold will likely remain sluggish until a firm US-Iran agreement is in place. Meanwhile, news headlines continue to drive swings. The long-term bullish view on gold remains constructive, with current levels seen as a good accumulation opportunity.

What now?

Category

Local Fixed Income

Outlook

Bearish

Strategy

Stay defensive within an average duration of 2 to 5 years, as foreign exchange-driven volatility, upcoming bond supply, and potentially more BSP rate hikes may keep the yield curve elevated. While 2- to 3-year yields have settled below their 2018 highs, the 5-year yield still trades flat to the back of the yield curve. Recent auctions show market participants are willing to bid more aggressively to be awarded volume and prevent another rejection.

Category

Local Equities

Outlook

Neutral

Strategy

Maintain a cautiously defensive outlook and lean toward banks, defensive names, and high-quality index stocks that could benefit from improved macroeconomic confidence. Stay nimble and consider pullbacks as bargain-hunting opportunities.

Category

Global Fixed Income

Outlook

Bearish

Strategy

Maintain a slight underweight in duration, with focus on the 3- to 7-year segment, where carry remains compelling, while limiting exposure to further upside in yields. With US inflation tilting toward the upside, yields are likely to remain elevated, reinforcing a higher-for-longer rate environment. Near-term direction will continue to be shaped by geopolitical developments and inflation expectations.

Category

Global Equities

Outlook

Slightly Bullish

Strategy

Maintain a prudent allocation by focusing on sectors with stable earnings and attractive yields, while remaining selective in adding exposure to fundamentally strong companies amid market uncertainty. Elevated geopolitical risks continue to support energy prices through a higher risk premium, which may limit upside potential for global equities in the near term.

Category

USD/PHP

Outlook

Neutral

Strategy

Maintain a neutral to mildly bearish stance, with price action expected to remain contained within the 61.40-61.80 range, as repeated rejection near 61.75 continues to cap rallies. Favor fading strength into resistance while selectively building positions on dips. The balanced flows and moderating momentum reinforce consolidation, with mixed macroeconomic signals—softening US sentiment and persistent geopolitical risk—keeping the pair range-bound, with a slight downside bias.

Category

G10 Currencies / US Dollar

Outlook

Slightly Bullish

Strategy

While many market players expect a softer dollar, this view is not strongly backed by actual trading activity, so the greenback’s downside may be limited rather than sharp. The currency market may move slowly without a clear upward or downward trend. Currencies that move more with global growth (like AUD, NZD, NOK, and SEK) could perform better, while major pairs like EUR/USD may trade within a narrow range. Given the lack of a strong conviction for a major move, opportunities to buy these growth-sensitive currencies on dips may be better than betting on a big dollar decline.

Category

Gold

Outlook

Slightly Bullish

Strategy

Gold has moved below USD 4,500 on recent US-Iran developments. Though Brent Crude has dropped below USD 100, the US Federal Reserve remains hawkish on continued inflationary pressure. Gold will likely remain sluggish until a firm US-Iran agreement is in place. Meanwhile, news headlines continue to drive swings. The long-term bullish view on gold remains constructive, with current levels seen as a good accumulation opportunity.

(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.)

Metrobank US-Iran Risk Index: Conflicting messages

What now?

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