Headlines
Private credit collapse and budget-season tax anxiety lead the wires.
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)
Policy rate at 10%, corridor unchanged; reserves at $34.12B pre-ACU.
WATCH
- ◆Next MPC meeting — forward guidance on corridor
- ◆Post-ACU reserves level vs $30B threshold
RISK
- ▼Sub-$30B post-ACU reserves constrain further FX intervention
- ▼Stale corridor at odds with evolving credit contraction
Banking
Q4 prints held; private credit contraction deepens the impairment cycle.
WATCH
- ◆Q1 2026 NPL and CAR disclosure
- ◆June 7 budget — recapitalization allocation scope
RISK
- ▼Credit growth at historic low deepens the NPL resolution trap
- ▼Fiscal borrowing crowds out whatever private credit demand remains
NPL at 35.73% and CAR at 1.56% on the Q4 2025 print — system balance-sheet disclosure remains frozen pending Q1 2026 data. Private sector credit growth falling to a historic low confirms the credit-cycle trap: banks cannot lend against impaired capital, and borrowers cannot service existing obligations at 10% policy rates and 8.60% CPI. The binding constraint is fiscal — the June 7 budget session is the only visible pathway for recapitalization. Bankers demanding tougher recovery laws signals the sector knows the NPL stock is not self-resolving. The system is not lending its way out; fiscal intervention or regulatory forbearance remain the only realistic paths.
FX & External
Taka flat at 122.75; remittance and trade gap held from prior prints.
External Flow Balance
WATCH
- ◆Next monthly remittance print — stabilization vs further decline
- ◆BB FX intervention pace and reserve drawdown
RISK
- ▼Remittance mean-reversion below $3B erases trade-gap offset
- ▼Brent at $109 keeps import bill elevated against static remittance
DSE Markets
DSEX +8.5pts to 5,212; breadth reverses but volume thins further.
DSEX Index
WATCH
- ◆Volume — a sustained bounce needs turnover above BDT 800cr
- ◆Third session direction to confirm trend reversal or continuation
RISK
- ▼Turnover collapse below BDT 650cr signals acute exit liquidity risk
- ▼Credit-cycle fundamentals keep institutional buyers sidelined
DSEX’s 8.5-point bounce to 5,212 came on BDT 676cr — turnover contracting another 7% from Monday’s already thin BDT 726cr. Breadth reversed to 181 advancers vs 138 decliners, but the volume collapse means the bid is retail-led, not institutional. DS30 at 1,970 — still refusing the 2,000 handle — confirms financials remain structurally offered. The fundamental overhang is unchanged: NPL at 35.73%, CAR at 1.56%, and private credit growth at a historic low leave the banking index de-rated with no earnings catalyst. Power tariff warnings from steel makers add input-cost pressure to industrial names. The only defensible position remains quality over breadth.
T-Bonds & T-Bills
T-bills ease across the curve; 5Y and 10Y unchanged.
BD Govt Yield Ladder
WATCH
- ◆Next T-bill auction — demand depth at lower cut-offs
- ◆Budget June 7 — fiscal supply overhang in H2
RISK
- ▼Budget borrowing target pressures long-end supply
- ▼Equity-to-bill rotation may reverse if DSE stabilizes
Macro & Inflation
Inflation held; credit growth at historic low confirms tightening transmission.
WATCH
- ◆Next CPI print — non-food below 9% threshold for rate-cut runway
- ◆Credit growth trajectory — further compression signals demand collapse
RISK
- ▼Brent at $109 keeps energy pass-through risk elevated
- ▼Taxes on essentials add fiscal-push component to CPI stickiness
CPI at 8.60% and non-food at 9.09% — both held from prior prints — keep the policy rate anchored at 10% with no rate-cut runway. Private sector credit growth falling to a historic low confirms the tightening cycle is transmitting: demand is compressing, not rotating. Taxes on essentials flagged by DS add a fiscal-push component to what was a demand-pull problem — regressive levies feed straight into the CPI basket the BBS is printing. With credit at 6.03% and declining, the economy is in a credit squeeze where neither monetary easing nor lending resumption is imminent. Steel makers warning against power price hikes underscore the input-cost channel that keeps non-food above 9% even as food inflation moderates.
Remittance
Held from prior print; reversion trajectory toward $2.89B mean.
WATCH
- ◆Next month print — stabilization at $3.1B+ or further decline
- ◆Formal vs informal channel share stability
RISK
- ▼Further reversion toward $2.89B mean erases trade-gap offset
- ▼Gulf labour market softening reduces diaspora flows
Commodities
Gold steady at $4,577/oz; LNG JKM at $15 pending refresh.
WATCH
- ◆LNG JKM refresh — gas import cost driver
- ◆Gold above $4,700 — reserve valuation support
RISK
- ▼LNG spike reprices power-sector costs
- ▼Gold volatility compresses reserve valuations
Fiscal
Budget-season anxiety builds; revenue and borrowing on prior-period prints.
WATCH
- ◆Budget session June 7 — revenue target and borrowing plan
- ◆Steel sector response to potential power price hike
RISK
- ▼Revenue shortfall widens domestic borrowing, crowding private credit
- ▼Tax increases on essentials amplify inflation at 8.60% CPI
Iran War & Oil
Brent unchanged below $110; WTI flat at $102.48.
Brent Crude
WATCH
- ◆Brent sustained below $110 or reversal
- ◆Any Gulf/Hormuz escalation — reprices Brent rapidly
RISK
- ▼Even at $109, import bill runs above current-account comfort threshold
- ▼Spread compression could reverse on escalation
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