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Metrobank US-Iran Risk Index: Renewed optimism
Market players pin hope of the war’s end on continued peace talks between the US and Iran.
May 7, 2026 by Metrobank, Investment Counselor Department
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Metrobank’s US-Iran Risk Index settled at 135.1 on May 6, lower by 6.2% than its value of 144.1 during the prior trading day.
Market players’ hopes for the conflict’s end were buoyed on Wednesday by news that Iran was reviewing the US’s peace proposal, with a source from mediator Pakistan saying that a deal was near, according to Reuters. As a result, Brent Crude fell to USD 101 per barrel, as supply concerns abated, according to data compiled by Bloomberg.
Meanwhile, the US dollar weakened, as news of a potential peace deal moved investors away from the safe haven asset. This led to the dollar-peso exchange rate closing slightly lower during Wednesday’s trading day, Philippine time, at 61.31. The 10-year US Treasury yield also moved downward by nearly 8 basis points (bps) during US trading.
All eyes will be on Iran’s official response to the US’s peace proposal, which CNN reported may come as early as today.
Metrobank still sees elevated risk and volatility in the near-term while a peace deal hasn’t been struck. 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 even further in the coming months.
Moreover, Metrobank forecasts at least one more rate hike 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?
What now?
Category
Local Fixed Income
Outlook
Bearish
Strategy
Stay defensive in the 2 to 5‑year sector, as foreign exchange‑driven volatility, upcoming bond supply, and potentially more BSP rate hikes may contribute to a steeper yield curve. Better value is seen in 4- to 5-year bonds, whose yields have exceeded 2024 highs, feature a 30-bps premium above 3-year yields, and are roughly flat to the 7-year area.
Category
Local Equities
Outlook
Bearish
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 exposure to liquid, high‑quality duration in the 2‑ to 5‑year segment, where carry and policy visibility remain most attractive. With recent US inflation and growth data meeting expectations, yields are likely to trade sideways to modestly lower, though near‑term moves will remain driven by geopolitical developments.
Category
Global Equities
Outlook
Neutral
Strategy
Maintain a defensive positioning, with a focus on high-dividend and resilient sectors, alongside selective interest in quality growth names amid ongoing volatility. Elevated geopolitical risks are contributing to renewed strength in oil prices through a higher risk premium in energy markets and may continue to limit sustained upside in global equities.
Category
USD/PHP
Outlook
Mildly Bullish
Strategy
USD/PHP continues to trade at higher levels, supported by oil prices, ongoing global uncertainty, and general pressure on the peso. Hold existing USD positions but avoid adding too close to 61.70-62.00. Price action is expected to remain contained, with key support at 61.35 and 61.00, and key resistance at 61.80 and 62.00, where upside momentum may be moderate.
Category
G10 Currencies / US Dollar
Outlook
Neutral
Strategy
Positioning should remain tactical and rangebound, as mild risk‑on sentiment from Iran’s peace proposal is providing near‑term support to G10 currencies. But geopolitical uncertainty, elevated oil prices, and a resilient USD continue to cap upside. With intervention risk anchoring USD/JPY lower and EUR/GBP holding on its technical supports, the near‑term bias favors selective USD selling on rallies rather than aggressive positioning, while remaining responsive to headline risk.
Category
Gold
Outlook
Neutral to Slightly Bearish
Strategy
Persistent pressure in the Middle East and the Strait of Hormuz have kept oil prices above USD 100 per barrel this past week. Gold and precious metals retain their slightly bearish tilt. Geopolitical headlines will continue to drive near-term movements, though the long-term bullish view on gold remains intact.
(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.)
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