Global markets and local investors are bracing for a volatile week as looming policy decisions from the United States (US) Federal Reserve and the Bangko Sentral ng Pilipinas (BSP) collide with fluid geopolitical developments in the Middle East.

Traders are closely tracking whether a definitive peace agreement will materialize between the US and Iran. A formal pact—particularly one that guarantees the reopening of the strategic Strait of Hormuz—would deliver a critical reprieve to global equity and commodity markets, which have been upended by over three months of war.

While both Washington and Tehran have signaled that negotiations are entering the final stages, asset managers remained wary as the two sides continue to resolve conflicting interpretations of the pact’s core terms.

Domestic market sentiment will largely hinge on back-to-back central bank meetings, with the Federal Open Market Committee scheduled for June 16 to 17, followed by the BSP’s monetary policy review on June 18.

F. Yap Securities Inc. noted that while consensus forecasts a 25-basis-point increase from the BSP to tame persistent inflation, the Fed is widely expected to hold its benchmark rate steady.

The brokerage advised clients to maintain a defensive posture, noting that until both decisions land, trading volume will likely remain range-bound.

The upcoming FOMC meeting is the baptism by fire for newly installed Fed Chair Kevin Warsh. The leadership faces a stark binary choice: hold borrowing costs steady to assess the economic impact of recent energy shocks, or signal that underlying inflation remains too stubborn, thereby preparing markets for a more aggressive trajectory. While Warsh appears inclined to hold steady, local brokerages warn he risks being heavily outnumbered by a more hawkish Board of Governors.

On the other hand, the BSP faces its own tactical dilemma as it must choose between a more aggressive 50-basis-point jumbo hike and a consensus-aligned 25-basis-point adjustment. Analysts at F. Yap Securities pointed out that a standard 25-basis-point move is preferred to mitigate immediate market volatility. More aggressive posturing risks signaling monetary anxiety and disrupting fragile local credit channels.

The firm favors modest position sizing, noting that a straightforward 25-basis-point cut alongside a stable Fed message would support base-building for the Philippine Stock Exchange Index toward the 6,000 threshold.

Despite the macro headwinds, local brokerages are identifying selective corporate opportunities.

Abacus Securities Corp. recommended that investors go overweight on SM Prime Holdings Inc. (SMPH), despite headwinds in its residential property segment, changing retail habits, and sustained capital outflows from foreign funds.

Abacus emphasized that equity markets are currently valuing the property giant at levels last seen over eleven years ago, even though SMPH’s revenues have more than doubled and both EBITDA and net income have expanded by more than 150 percent over that period.

Furthermore, its gross floor area in the Philippines has grown by nearly 50 percent despite stagnant commercial foot traffic. The office and hotel divisions have recorded top-line growth exceeding 200 percent, while residential revenues over the past twelve months have nearly doubled from 2014 levels.

Concurrently, Unicapital Securities Inc. expressed a preference for consumer staple manufacturer Monde Nissin Corp. (MONDE), citing steady first-quarter growth across its core brands and initial signs of stability in its alternative meat division. Unicapital Research Analyst Jeri R. Alfonso noted that corporate management successfully insulated the company from volatile commodity markets by locking in its wheat and palm oil supply requirements ahead of schedule, preventing higher global crude prices from eroding manufacturing margins.