Headlines
Ten wires — ADP ambition, reserve returns, and an energy trap warning.
Food's Share of Spending Rises as Income Falls
An IMF chart, built on USDA data, plots food spending as a share of GDP against food's share of total consumer spending. Poorer economies sit further up and further right on both scales.
- ▸Advanced economies hold the bottom-left corner. Food takes roughly 5 to 22 percent of consumer spending in that group, on food outlays worth under about 13 percent of GDP.
- ▸Emerging markets spread across the whole middle of the chart. Their markers run from about 11 percent of consumer spending to above 40 percent, and the group overlaps the advanced cluster at one end and the low-income band at the other.
- ▸Low-income developing countries occupy the top-right. Every marker in that group sits above roughly 29 percent of consumer spending, and the highest of them approach 55 percent.
A household that already spends half its money on food has no cheaper category to move into, so a price rise comes out of everything else it buys. The IMF places Bangladesh in the low-income group at the upper right of this chart. Food and beverages carry the largest single weight in the Bangladesh CPI basket, which is the same fact seen from the other side.
Food inflation belongs in the credit process, not only in the macro commentary. A price move reaches disposable income before it reaches any borrower's file, and the thinnest-buffer books — retail, microfinance-linked exposure, small-ticket SME — feel it first. A risk team reading food prices only off the monthly CPI print is working from the slowest signal available.
Policy & Rates (Bangladesh Bank)
No rate change; corridor held pending next MPC response to CPI.
WATCH
- ◆Post-ACU reserves print — effective import cover
- ◆Next MPC response to persistent above-8% CPI
RISK
- ▼May CPI above 9.5% forces emergency tightening consideration
- ▼Post-ACU reserves below $32.5B compresses import-cover buffer
Banking
NPL at 35.73%; CAR at 1.56% — regulatory stasis extends.
WATCH
- ◆FY27 budget recapitalisation allocation — June 7 session
- ◆Q1 2026 NPL disclosure timeline
RISK
- ▼Resolution Act rollback removes restructuring backstop
- ▼CAR at 1.56% triggers PCA on next quarterly disclosure
NPL at 35.73% and CAR at 1.56% are functionally frozen — nine consecutive issues without movement. The ADP preliminary approval at BDT 3.0tn, a 50% increase, lands against just 36% implementation in nine months — if the government cannot execute existing development spending, a meaningful recapitalisation carve-out in the FY27 budget is unlikely. The World Bank’s Bank Resolution Act conditionality remains the external pressure point; without it, no institutional forcing function for balance-sheet repair exists. The provisioning shortfall of ~BDT 1.4tn is a stock problem that flow improvements from oil relief cannot fill. June 7 is the next credible catalyst.
FX & External
USD/BDT flat at 122.75; awaiting post-ACU reserves and May trade data.
External Flow Balance
WATCH
- ◆Post-ACU reserves print — effective import cover margin
- ◆May trade data — $3B+ gap persistence
RISK
- ▼Post-ACU reserves below $32B if June inflows lag
- ▼Trade gap persistence outpaces remittance normalisation
DSE Markets
First session since April; DSEX at 5,234, breadth 127/198 negative.
DSEX Index
WATCH
- ◆DSEX breach below 5,200 on elevated volume
- ◆Bank-sector stock reaction to NPL/CAR stasis
RISK
- ▼Prolonged thin volume masks institutional exit
- ▼Floor price regulatory decision on trapped large-caps
DSEX at 5,234 — down 23 points from the April 21 close of 5,257 — marks the first session in nearly three weeks. Breadth at 127 advancing versus 198 declining and turnover at BDT 845cr suggest thin, directionally negative participation. The 0.64x advance-decline ratio signals broad-based selling rather than index-weight rotation. Bank-sector counters remain the swing factor with NPL frozen at 35.73% and CAR at 1.56%. The BSEC’s new rules for converting closed-end mutual funds may unlock marginal liquidity, but structural equity demand depends on macro clarity — and CPI sticky at 8.71% provides none.
T-Bonds & T-Bills
5Y reverts to 10.75%; 364d at 10.69% maintains near-inversion.
BD Govt Yield Ladder
WATCH
- ◆Next 5Y auction — confirms demand at 10.75%
- ◆364d-5Y spread — any sustained inversion signals distress
RISK
- ▼CPI at 8.71% prevents sustained rally below 10.50%
- ▼FY27 fiscal supply calendar re-steepens the curve
The 5Y’s whipsaw — 10.23% to 10.75% to 10.23% and back to 10.75% inside a single week — is the most violent duration repricing the BD curve has experienced in this cycle. Yesterday’s narrative that oil’s collapse removed the bear-steepening catalyst lasted exactly one session. The 364d at 10.69% maintains near-inversion against the 5Y at 10.75%, offering 6bp of term premium — functionally zero for a 4.7-year extension. With CPI at 8.71% and non-food at 9.09%, the curve correctly prices zero easing optionality. The desk position: avoid the 5Y outright, concentrate in 91d–182d where carry is competitive and rollover risk manageable.
Macro & Inflation
CPI at 8.71%; non-food at 9.09% confirms sticky inflation.
WATCH
- ◆May CPI — determines if re-acceleration sustains
- ◆BB monetary policy response to above-8% persistence
RISK
- ▼CPI above 9.5% forces emergency MPC
- ▼Negative real deposit rates past -200bp trigger term-deposit flight
Remittance
Remittance at $3.76B; May print determines sustainability.
WATCH
- ◆May remittance print — $3.76B sustainability
- ◆Formal vs informal channel share
RISK
- ▼Reversion to $2.9B mean erases trade gap offset
- ▼Gulf labour softening reduces diaspora flows
Commodities
Gold at $4,720 on safe-haven bid; LNG at $15 awaits refresh.
WATCH
- ◆LNG JKM refresh — gas import cost driver
- ◆Gold above $4,700 — reserve valuation signal
RISK
- ▼LNG spike reprices power sector costs
- ▼Gold volatility compresses reserve valuations
Fiscal
ADP at BDT 3.0tn approved; 36% utilisation undercuts the ambition.
WATCH
- ◆Final ADP decision — May 18
- ◆June 7 budget session — revenue targets and recapitalisation
RISK
- ▼Revenue shortfall forces higher domestic borrowing
- ▼ADP execution below 40% compresses growth impulse
Iran War & Oil
Brent at $101.29 — war premium retreating; fresh clashes cap downside.
Brent Crude
WATCH
- ◆Brent sustained close below $100 — structural de-escalation signal
- ◆Fresh US-Iran escalation — repricing risk to $115+
RISK
- ▼Hormuz incident reprices Brent $15+ within hours
- ▼OPEC+ supply discipline maintains $100 floor
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