Metrobank US-Iran Risk Index: Fragile talks

The fragile state of US-Iran negotiations will likely keep market players on risk-off mode in the coming days.

May 12, 2026 by Metrobank, Investment Counselor Department

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Metrobank’s US-Iran Risk Index settled at 137.7 on May 11th, 2.0% higher than the prior trading day.

Iran's rejection of the US's peace proposal and reports of US President Donald Trump’s comments showing the delicateness of the situation, pushed risk levels higher on Monday. Trump said the ceasefire was on “life support,” news agencies, including Reuters reported.

Brent Crude closed higher at USD 104 per barrel during UK trading on Monday, according to data compiled by Bloomberg, as market players priced in the Strait of Hormuz’s extended closure.

The US dollar index, meanwhile, posted gains, as safe-haven flows fortified the currency amid geopolitical uncertainty. This also led to the dollar-peso exchange rate closing above the 61-level again during Philippine trading on Monday, at 61.15. The benchmark 10-year US Treasury yield also edged upward by nearly 6 basis points on rising oil prices, according to data compiled by Bloomberg.

The fragile state of US-Iran negotiations will likely keep market players increasingly more risk-off in the days ahead, especially given Trump’s comments. Upside risk for oil, the dollar-peso exchange rate, and US and Philippine bond yields will likely persist as a result.

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?

Asset Class	Outlook	Strategy
Local Fixed Income	Bearish	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 the highs last seen in 2022, and are roughly 30 basis points (bps) below10-year bonds.
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 a bargain-hunting opportunities.
Global Fixed Income	Bearish	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.
Global Equities	Neutral	Maintain a cautious stance by prioritzing high-yielding and defensive sectors, while selectively allocating to strong growth companies despite continued market volatility. Heightened geopolitical tensions drive prices higher through an increased risk premium in energy markets, which could continue to cap meaningful gains in global equities.
USD/PHP	Neutral	USD/PHP climbed back to the 61-handle on Monday, though price action remains largely headline driven for now. Downside may be limited by importer and fixing demand. Watch 61.05 and 60.85 as support levels, and 61.30 and 61.55 as resistance levels. Range trade looks favorable unless a catalyst breaks the pair and sustains at 61.00 and 61.30 levels.
G10 Currencies / US Dollar	Neutral	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.
Gold	Neutral	Early rallies past USD 4,700 stalled, as negotiations fail and threats of escalation resurface. However, resilient demand sees gold re-establishing support above 4,600. News headlines will continue to steer direction in the near-term, though the long-term bullish view on gold remains intact.

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 the highs last seen in 2022, and are roughly 30 basis points (bps) below10-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 a 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 cautious stance by prioritzing high-yielding and defensive sectors, while selectively allocating to strong growth companies despite continued market volatility. Heightened geopolitical tensions drive prices higher through an increased risk premium in energy markets, which could continue to cap meaningful gains in global equities.

Category

USD/PHP

Outlook

Neutral

Strategy

USD/PHP climbed back to the 61-handle on Monday, though price action remains largely headline driven for now. Downside may be limited by importer and fixing demand. Watch 61.05 and 60.85 as support levels, and 61.30 and 61.55 as resistance levels. Range trade looks favorable unless a catalyst breaks the pair and sustains at 61.00 and 61.30 levels.

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

Early rallies past USD 4,700 stalled, as negotiations fail and threats of escalation resurface. However, resilient demand sees gold re-establishing support above 4,600. News headlines will continue to steer 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.)

Metrobank US-Iran Risk Index: Fragile talks

What now?

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