Economy2 MIN READ
Metrobank US-Iran Risk Index: Another impasse
Iran’s rejection of the US’s peace proposal may keep risk levels elevated this week.
May 11, 2026 by Metrobank, Investment Counselor Department
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Metrobank’s US-Iran Risk Index settled at 135.0 on May 8th, 1.1% higher than the prior trading day.
Oil prices marginally rose on Friday, as hopes for a successful peace deal tempered the effects on the commodity of reignited military tensions in the Strait of Hormuz. Brent Crude closed at USD 101-per-barrel level on Friday, UK trading, according to data compiled by Bloomberg.
The benchmark 10-year US Treasury yield edged lower, as global inflation expectations moderated. Meanwhile, the US dollar’s strength waned on Friday, as the ceasefire weighed on the currency’s safe-haven appeal, leading to the dollar-peso exchange rate closing below the 61-level once again at 60.61 on Friday, Philippine time.
Over the weekend, Al Jazeera reported that Iran rejected the US's peace proposal, leading to another impasse in negotiations between the two countries. US President Donald Trump has called Iran’s response “unacceptable,” a signal that tensions could persist. With oil prices already moving upward in early Monday trade, upside risks will likely remain this week as a lasting resolution to the conflict remains out-of-sight.
Metrobank still sees elevated risk and volatility in the near-term while a peace deal has not 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. Value is still seen in 4- to 5-year bonds, which have returned to highs last seen in 2022, and are roughly 30 basis points (bps) below 10-year bonds.
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 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 headline-driven by geopolitics.
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 Bearish
Strategy
USD/PHP has transitioned back into a range after failing to sustain gains above the 61 level, as improving risk sentiment and easing geopolitical premium limit USD follow-through. Maintain a neutral-to-light USD stance, reducing exposure toward 60.70-60.95, where resistance remains firm. Price action is expected to remain contained, with key support levels at 60.25 and 60.00, while resistance levels at 60.70 and 60.95 continue to cap an upside unless reinforced by renewed Middle East tensions or a sharp rebound in oil prices.
Category
G10 Currencies / US Dollar
Outlook
Neutral
Strategy
G10 currencies are bearish against USD for the week, driven by stronger US data and renewed geopolitical risks. G10 is expected to underperform slightly or trade sideways, as a downside is limited by existing support levels while an upside is capped by persistent USD demand. Favor range trading with slight USD bias rather than aggressive directional positioning.
Category
Gold
Outlook
Neutral
Strategy
While gold broke past its USD 4,700 resistance last week due to the ceasefire, the risk of the conflict’s re-escalation persists, keeping rallies contained and in range. Headlines will continue to drive direction in the near-term, 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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