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Metrobank US-Iran Risk Index: No swift end seen
Financial market players are bracing for the war to drag on longer than expected.
By Metrobank Research, Investment Counselor Department
Metrobank’s US-Iran Risk Index settled at 143.1 on March 26, 2026, 4.2% higher than the previous day.
Oil prices rose once again, as hopes for a relatively quick resolution to the war were dashed by conflicting statements from the US and Iran. While US President Donald Trump continues to claim talks are occurring to settle the conflict, Iran has denied that any negotiations have taken place between the two countries. Iran also rejected the US’s 15-point proposal to end the war, with an Iranian official saying the plan “serves only US and Israeli interests”, according to Reuters.
As a result, Brent crude closed Thursday’s trading day higher at USD 108 per barrel, as the Strait of Hormuz, a critical transit point for global oil prices, remained shut. Financial market players continued to price in mounting inflation risks, with the benchmark 10-year US Treasury yield moving upward. The US dollar also maintained its strength as a safe-haven asset, with the dollar-peso exchange rate closing above the 60-level once again during Philippine trading hours on Thursday.
Some slight relief for oil markets may be underway after Trump’s recent announcement that he is extending the pause on Iran strikes until April 6. Still, unless any substantial and verified progress has been made on ending the war from both sides, continued attacks and a blocked strait will keep markets on the edge and oil prices elevated.
As oil prices rise, Metrobank sees inflation breaching the Bangko Sentral ng Pilipinas (BSP)’s target band this year, which will likely compel the central bank to raise their policy interest rates.
Moreover, we still see the dollar-peso exchange rate staying elevated in the near-term as steady dollar demand weighs on a historically 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 on duration amid elevated foreign exchange volatility. Focus on liquid 2–5-year tenors and add only on pronounced yield spikes. Avoid extending duration, especially at the long end of the yield curve, until peso conditions and global risks show clear signs of stabilization. |
| Local Equities | Bearish | Expect bargain hunting of cheaper names in the near term. However, gains may remain capped amid oil-price volatility and developments in the Middle East. Buy on dips and take profit during rallies. |
| Global Fixed Income | Bearish | Continue to favor short-dated quality bonds up to 5 years, as inflation fears push yields upward. Expect yields to stay elevated, as geopolitical tensions keep investors cautious. |
| Global Equities | Neutral | Maintain a defensive approach by prioritizing high-dividend sectors while taking advantage of volatility to accumulate select quality-growth names. |
| USD/PHP | Rangebound | Buy US dollars on dips or near the 59.85-60.15 support levels, as short-term fundamentals favor a mildly firmer USD after the US Federal Reserve (Fed) maintains its policy. Still, elevated energy prices and geopolitical risk will provide demand for USD. The market is expected to trade on headlines for the lack of high-impact US and Philippine data release this week. |
| G10 Currencies / US Dollar | Bearish | Major currencies EUR, GBP, and JPY see some recovery following their respective central banks’ decision to pause. However, inflation concerns driven by higher-for-longer oil prices continue to weigh on global growth prospects, weakening G10 economies dependent on energy imports while safe-haven trades favor the USD. |
| Gold | Bearish | Consistently elevated oil prices have driven hotter US inflation and delayed Fed rate cut expectations, contributing to a stronger US dollar and lower gold prices. The precious metal has broken through key levels at USD 4,600 and USD 4,400, and the next key supports are expected at USD 4,100 and USD 3,600. However, our long-term view is still for gold to outperform, as global central banks diversify their reserve assets away from USD and US Treasuries. |
(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.)