Metrobank US-Iran Risk Index: Oil and peso swings

Expect market players to remain in risk-off mode following news of the US calling off an attack on Iran.

May 19, 2026 by Metrobank Research, Investment Counselor Department

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Metrobank’s US-Iran Risk Index settled at 145.6 on May 18th, 2.2% higher than the prior trading day.

Global oil prices rose, as the Strait of Hormuz's closure and potential military escalation continued to stoke supply concerns. Brent crude closed at USD 112 per barrel on Monday, UK trading, according to data compiled by Bloomberg.

Oil prices eased slightly in early Tuesday trade, following news that US President Donald Trump called off a military attack on Iran at the request of Gulf allies, according to Al Jazeera. It was also reported that negotiations were underway after stalled progress on talks.

Despite providing some relief, financial market players are expected to remain risk-off until concrete progress is made toward a peace truce.

The benchmark 10-year US Treasury yield was little changed on Monday, US trading, after reaching a one-year high last week. Market players continue to digest the current US inflation outlook and the US Federal Reserve's (Fed) regime change.

Meanwhile, the US dollar index softened on Monday, though the greenback still maintained its strength against a fundamentally weak peso. The dollar-peso exchange rate recorded a new all-time high closing price of 61.75 on Monday, Philippine time.

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 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 in the 2- to 5‑year sector, as foreign exchange-driven volatility, upcoming bond supply, and potentially more BSP rate hikes may steepen the yield curve. 3- to 5-year bonds have already returned to 2019 highs, but adding positions aggressively may not be advisable given the unsupportive economic environment.
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 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.
Global Equities	Neutral	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.
USD/PHP	Mildly Bullish	USD/PHP strategy remains range-bound with a slight USD-positive bias, as strong dollar fundamentals and steady corporate demand continue to support the pair, particularly on dips. However, the upside remains capped near the 61.75–62.00 resistance zone due to strong supply and positioning. The pair is likely to remain driven by external USD flows rather than domestic catalysts, reinforcing a tactical trading approach.
G10 Currencies / US Dollar	Bearish	The strategy for G10 versus USD remains tactical and defensive, as persistent US inflation, rising yields, and a stronger USD trend continue to cap the upside in major currencies. While some pairs may attempt short-term rebounds due to oversold conditions, the broader macroeconomic backdrop still favors USD strength. This suggests that rallies in EUR, GBP, and other G10 currencies should fade. Positioning should focus on selling rallies rather than chasing downside, given the risk of consolidation after an extended USD move.
Gold	Mildly Bearish	Gold broke below initial support levels, re-establishing stability around 4,500, as rising oil prices and a hawkish US Federal Reserve puts pressure on non-interest-bearing assets such as metals. News headlines around the escalation US-Iran drive near-term bearishness, 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 steepen the yield curve. 3- to 5-year bonds have already returned to 2019 highs, but adding positions aggressively may not be advisable given the unsupportive economic environment.

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

Mildly Bullish

Strategy

USD/PHP strategy remains range-bound with a slight USD-positive bias, as strong dollar fundamentals and steady corporate demand continue to support the pair, particularly on dips. However, the upside remains capped near the 61.75–62.00 resistance zone due to strong supply and positioning. The pair is likely to remain driven by external USD flows rather than domestic catalysts, reinforcing a tactical trading approach.

Category

G10 Currencies / US Dollar

Outlook

Bearish

Strategy

The strategy for G10 versus USD remains tactical and defensive, as persistent US inflation, rising yields, and a stronger USD trend continue to cap the upside in major currencies. While some pairs may attempt short-term rebounds due to oversold conditions, the broader macroeconomic backdrop still favors USD strength. This suggests that rallies in EUR, GBP, and other G10 currencies should fade. Positioning should focus on selling rallies rather than chasing downside, given the risk of consolidation after an extended USD move.

Category

Gold

Outlook

Mildly Bearish

Strategy

Gold broke below initial support levels, re-establishing stability around 4,500, as rising oil prices and a hawkish US Federal Reserve puts pressure on non-interest-bearing assets such as metals. News headlines around the escalation US-Iran drive near-term bearishness, 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: Oil and peso swings

What now?

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