Metrobank US-Iran Risk Index: Work in progress

Financial markets’ risk levels have slighted tempered, as the US and Iran continue to work out a potential deal.

May 28, 2026 by Metrobank, Investment Counselor Department

Share this article:

Share this article:

Metrobank’s US-Iran Risk Index settled at 127.2 on May 27th, 4.3% lower than its value of 132.9 on the prior trading day.

Market players remained somewhat upbeat on the ongoing US-Iran talks, pushing risk levels in financial markets lower.

Brent Crude oil prices mostly stayed below USD 100 per barrel so far this week, according to data compiled by Bloomberg. Along with relatively lower oil prices moderating inflation expectations, the benchmark 10-year US Treasury yield moved lower by nearly 8 basis points on Tuesday, US trading.

Meanwhile, the negotiations kept the US dollar index trading sideways, with the dollar-peso exchange rate staying within the mid-61 level so far this week. The currency pair closed at 61.56 on Tuesday, Philippine trading.

While market players’ optimism tempered risk levels, upside risks are still very possible if talks fail to bear fruit.

Though talks reportedly progressed, US President Donald Trump still expressed dissatisfaction with the deal’s terms so far, according to Reuters. CNN also reported that the US military carried out strikes on Iranian soil this week, despite the ceasefire.

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 positions 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	Slightly Bullish	Maintain a prudent allocation by focusing on sectors with stable earnings and attractive yields, while remaining selective in adding exposure to fundamentally strong companies amid market uncertainty. Elevated geopolitical risks continue to support energy prices through a higher risk premium, which may limit upside potential for global equities in the near term.
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 pair 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	Slightly Bullish	Gold retreats below USD 4,500, as major sticking points keep the US-Iran peace framework in a stalemate. Though Brent Crude has dropped below USD 100, the Fed remains hawkish on continued inflationary pressure. Gold will likely remain sluggish until a firm US-Iran agreement is firmly in place. Meanwhile, headlines continue to drive swings. The long-term bullish view on gold remains constructive, with current levels seen as a good accumulation opportunity.

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 positions 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

Slightly Bullish

Strategy

Maintain a prudent allocation by focusing on sectors with stable earnings and attractive yields, while remaining selective in adding exposure to fundamentally strong companies amid market uncertainty. Elevated geopolitical risks continue to support energy prices through a higher risk premium, which may limit upside potential for global equities in the near term.

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 pair 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

Slightly Bullish

Strategy

Gold retreats below USD 4,500, as major sticking points keep the US-Iran peace framework in a stalemate. Though Brent Crude has dropped below USD 100, the Fed remains hawkish on continued inflationary pressure. Gold will likely remain sluggish until a firm US-Iran agreement is firmly in place. Meanwhile, headlines continue to drive swings. The long-term bullish view on gold remains constructive, with current levels seen as a good accumulation opportunity.

(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: Work in progress

What now?

Quick Links

Investment Strategies

Features and Insights

Resources