Metrobank US-Iran Risk Index: Closer to a deal

Market players are pricing in less risk in financial markets, as progress is reported on a US-Iran peace deal.

May 25, 2026 by Metrobank, Investment Counselor Department

Share this article:

Share this article:

Metrobank’s US-Iran Risk Index settled at 136.6 on May 22nd, 0.8% higher than its value of 135.5 on the prior trading day.

Risk levels were relatively flat by last week's close, as market players continued to price in a lack of visible progress in US-Iran peace talks. Brent Crude closed the trading week at USD 103.5 per barrel, UK trading, according to data compiled by Bloomberg.

Both the benchmark 10-year US Treasury yield and the US dollar index were little changed on Friday, US trading, due in part to a lack of developments in the conflict's resolution. The dollar-peso exchange rate pared some of its gains in the past few days, after hitting an all-time high last week. The exchange rate closed at 61.69 last Friday, Philippine time.

Hopes for a resolution to the conflict in the Middle East started to pick up again over the weekend. US President Donald Trump said that a peace deal to reopen the Strait of Hormuz has been "largely negotiated," according to Reuters. Brent Crude has already moved below USD 100 per barrel during early Monday trade on renewed optimism, according to data compiled by Bloomberg.

Still, uncertainties remain, as both sides continue to dispute various issues, such as Iran’s nuclear program, with Trump cautioning negotiators not to rush into a deal.

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, which will put upward pressure on Philippine bond yields.

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 within an average duration of 2 to 5 years, as foreign exchange-driven volatility, upcoming bond supply, and potentially more BSP rate hikes may keep the yield curve elevated. The 2- to 3-year yields have already returned to 2018 highs while 5-year trades flat to the back of the yield curve. Though aggressively adding potions is cautioned against, the rejection of bids near 8% at the Bureau of the Treasury’s 7-year auction last week may also discourage investors from bidding too defensively.
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 tilting toward the upside, yields are likely to remain elevated, reinforcing a higher-for-longer rate environment. 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 tensons drive prices higher through an increased risk premium in energy markets, which may continue to cap meaningful gains in global equities.
USD/PHP	Neutral	Maintain a neutral to mildly bearish stance, with price action expected to remain contained within the 61.40-61.80 range, as repeated rejection near 61.75 continues to cap rallies. Favor fading strength into resistance while selectively building positions on dips. The balanced flows and moderating momentum reinforce consolidation, with mixed macroeconomic signals—softening US sentiment and persistent geopolitical risk—keeping the pai range-bound, with a slight downside bias.
G10 Currencies / US Dollar	Bearish	G10 should remain tactically bearish, as USD support from elevated US yields and a higher-for-longer US Federal Reserve (Fed) policy rate outweigh the recent relief from improving risk sentiment and falling oil prices. While near-term rebounds in the EUR, GBP, and other G10 currencies may occur due to the stretched USD positioning, these are likely to be corrective and may be used as opportunities to sell rallies rather than chase upside.
Gold	Mildly Bearish	Gold broke below initial support levels, re-establishing stability around 4,500, as elevated oil prices and a hawkish Fed pressured 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 within an average duration of 2 to 5 years, as foreign exchange-driven volatility, upcoming bond supply, and potentially more BSP rate hikes may keep the yield curve elevated. The 2- to 3-year yields have already returned to 2018 highs while 5-year trades flat to the back of the yield curve. Though aggressively adding potions is cautioned against, the rejection of bids near 8% at the Bureau of the Treasury’s 7-year auction last week may also discourage investors from bidding too defensively.

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 tilting toward the upside, yields are likely to remain elevated, reinforcing a higher-for-longer rate environment. 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 tensons drive prices higher through an increased risk premium in energy markets, which may continue to cap meaningful gains in global equities.

Category

USD/PHP

Outlook

Neutral

Strategy

Maintain a neutral to mildly bearish stance, with price action expected to remain contained within the 61.40-61.80 range, as repeated rejection near 61.75 continues to cap rallies. Favor fading strength into resistance while selectively building positions on dips. The balanced flows and moderating momentum reinforce consolidation, with mixed macroeconomic signals—softening US sentiment and persistent geopolitical risk—keeping the pai range-bound, with a slight downside bias.

Category

G10 Currencies / US Dollar

Outlook

Bearish

Strategy

G10 should remain tactically bearish, as USD support from elevated US yields and a higher-for-longer US Federal Reserve (Fed) policy rate outweigh the recent relief from improving risk sentiment and falling oil prices. While near-term rebounds in the EUR, GBP, and other G10 currencies may occur due to the stretched USD positioning, these are likely to be corrective and may be used as opportunities to sell rallies rather than chase upside.

Category

Gold

Outlook

Mildly Bearish

Strategy

Gold broke below initial support levels, re-establishing stability around 4,500, as elevated oil prices and a hawkish Fed pressured 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: Closer to a deal

What now?

Quick Links

Investment Strategies

Features and Insights

Resources