Economy2 MIN READ
Metrobank US-Iran Risk Index: Stalled negotiations
Risk levels in financial markets rose, as US-Iran talks remained at an impass
May 13, 2026 by Metrobank, Investment Counselor Department
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Metrobank’s US-Iran Risk Index settled at 141.4 on May 12th, 2.7% higher than the prior trading day.
Talks between the US and Iran have stalled, leaving market players with less hope for a speedy end to the war and reopening of the Strait of Hormuz. These led to oil prices rising again on Tuesday, with Brent Crude closing at nearly USD 108 per barrel during UK trading.
Rising oil costs, meanwhile, led to US inflation rising to a near three-year high at 3.8% in April, according to the most recent data from the US Bureau of Labor Statistics. Higher inflation nudged the benchmark 10-year US Treasury yield upward on Tuesday. The US dollar also strengthened on safe-haven flows, with the dollar-peso exchange rate closing higher at 61.48 on Tuesday, Philippine trading hours.
With a lack of fresh developments in US-Iran negotiations, expect market players to remain in risk-off mode in the coming days as geopolitical risks mount.
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 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 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 titling toward the upside, yields are likely to remain elevated, reinforcing a higher-for-longer rate environment. Although, near-term direction will continue to be shaped by geopolitical developments and inflation expectations.
Category
Global Equities
Outlook
Neutral
Strategy
Maintain a cautious stance by prioritizing 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.)
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