Headlines
Fiscal stress leads; weak Eid sales and ATM crunch fill the holiday tape.
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)
Holding; corridor intact at 8.5–11.5% — next MPS the catalyst.
WATCH
- ◆Next MPS date and forward guidance
- ◆SDF utilization for excess liquidity signal
RISK
- ▼Real policy rate at +1.29% erodes if CPI reaccelerates
- ▼Reserves data lagging — last print 1 Apr
Banking
Capital functionally exhausted — NPL at 35.73%, CAR at 1.56%.
WATCH
- ◆Q1 2026 disclosure timeline — due Jun 2026
- ◆SCB (State-owned Commercial Bank) recapitalization roadmap from BB
RISK
- ▼CAR 844bp below 10% minimum implies indefinite regulatory forbearance
- ▼Provisioning shortfall compounds each quarter without fresh capital
NPLs at 35.73% are structural, not cyclical — the Q4 2025 print is unchanged from previous quarters, confirming the system has settled at this impairment level rather than actively deteriorating. But a CAR of 1.56% against the 10% Basel III floor means the capital buffer is functionally negative — regulatory forbearance is the only reason balance sheets remain operational. Recapitalization at scale is the arithmetic prerequisite for normalization; without it, provisioning shortfalls compound each quarter and erode depositor confidence. Q1 2026 disclosures due in June will show whether any bank-level improvement is emerging beneath the system aggregate, but the static CAR tells you the answer before the data arrives — there is no room left to absorb incremental classification.
FX & External
Stable at 122.75; reserves rebuilt, remittance nearly covering the gap.
External Flow Balance
USD/BDT flat at 122.75, reserves at $35.1bn — remittance at $3.13bn nearly offsets the $2.26bn trade gap.
Reserves at $35.1bn, up $0.99bn vs prior week; USD/BDT flat at 122.75 through May 2026.
Treasury: watch post-Eid import-payment surge for first pressure test on current FX range.
WATCH
- ◆Post-Eid LC settlement surge
- ◆Reserves sustainability above $35bn through H2
RISK
- ▼Seasonal import demand spike post-holiday could test FX band
- ▼Trade gap widening if Brent stabilizes above $90
DSE Markets
Dark for Eid — no trading since 21 Apr, gap risk on reopening.
DSEX Index
DSEX at 5,257 on last session 21 Apr — market closed for Eid-ul-Azha holiday week.
No price discovery since pre-holiday session; BSEC governance code review pending as catalyst.
Risk: watch gap-open on reopening — holiday-period global moves will price in at once.
WATCH
- ◆Gap risk on reopening — global equity moves during holiday
- ◆BSEC governance code implementation timeline
RISK
- ▼Thin liquidity on first post-holiday session
- ▼Weak Eid retail sales data may weigh on consumer-facing counters
T-Bonds & T-Bills
Front-end easing; 91d T-Bill at 10.15%, curve flat through 10y.
BD Govt Yield Ladder
91d T-Bill at 10.15%, 364d at 10.50% — front-end compression of 15–19bp from recent auction highs.
Short-end trending lower since late April; 5y–10y spread compressed to 13bp, curve nearly flat.
ALCO: front-end easing supports roll-down positioning — watch fiscal borrowing pace for reversal risk.
WATCH
- ◆Next auction sizes for demand signal
- ◆Government bank borrowing pace — already above annual target
RISK
- ▼Fiscal crowding if Govt bank borrow accelerates in Q4 FY26
- ▼Flat curve suppresses net interest margin for Asset-Liability Management (ALM) books
Macro & Inflation
Disinflation visible; CPI 12m avg at 8.6% but non-food sticky.
CPI Trend
CPI 12m avg at 8.6%, food at 8.24% — disinflation trend intact but pace slowing.
CPI 12m avg at its lowest since Mar 2023 (8.4% then). Non-food sticky at 9.09%.
MPC: real policy rate at +1.29% supports hold; watch non-food for services stickiness signal.
WATCH
- ◆Apr 2026 CPI print from BBS — disinflation confirmation
- ◆Private credit trajectory — 6.03% YoY is subdued
- ◆M2–credit divergence as liquidity pooling signal
RISK
- ▼Non-food sticky above 9% constrains MPC easing flexibility
- ▼M2 at 10.52% outpacing credit signals excess liquidity pooling in banking system
CPI 12-month average at 8.6% — lowest since Mar 2023 (8.4% then) — confirms disinflation, but the composition demands caution. Non-food at 9.09% reflects services-price stickiness that rate policy alone cannot resolve; food at 8.24% has eased but remains well above the pre-2023 corridor. The real policy rate at +1.29% is thin — any reacceleration in CPI erases the positive spread, leaving MPC no room for easing. Private credit at 6.03% YoY signals subdued corporate demand despite accommodative rhetoric; M2 at 10.52% growing faster than credit offtake means excess liquidity is pooling in the banking system rather than reaching the real economy. Import cover at 5.86 months is adequate but trending — lowest since Feb 2026 (5.3 then) — and any oil-price reversal compresses it quickly.
Remittance
$3,130mn holds — FX anchor intact through the Eid cycle.
WATCH
- ◆Jun–Jul seasonal pattern — pre-Eid inflows now past
- ◆GCC labor policy changes affecting worker count
RISK
- ▼Post-Eid seasonal dip typical in Jun–Jul
- ▼Informal channel share widens if kerb premium opens
Commodities
Gold elevated at $4,524/oz; LNG flat — monsoon demand ahead.
WATCH
- ◆LNG spot for Jun–Aug monsoon demand pricing
- ◆Gold as global risk-sentiment proxy
RISK
- ▼LNG spike on monsoon power demand lifts Petrobangla off-take costs
- ▼Sustained gold rally signals USD weakness and geopolitical hedging
Fiscal
Bank borrowing past annual target in nine months — crowding-out risk.
WATCH
- ◆FY27 budget announcement — expected Jun 2026
- ◆NBR restructuring progress and revenue mobilization
RISK
- ▼Private credit crowding-out as government competes for bank funding
- ▼T-Bill rate reversal if borrowing accelerates post-Eid
Iran War & Oil
Brent sliding demand-driven — import relief arrives with export-demand risk.
Brent Crude
Brent −$0.89 to $92.41, WTI at $88.57 — demand-driven retreat from May $111 peak continues.
Second consecutive session lower from $94.11 two days ago; $90 is the next key technical level.
Treasury: falling Brent eases fuel LC margins — watch $90 break for import-cover rerating.
WATCH
- ◆$90 Brent support level — next technical test
- ◆OPEC+ production decision at Jun meeting
- ◆Global PMI data for demand confirmation
RISK
- ▼Demand destruction implies weaker garment-order books H2 2026
- ▼Supply disruption or ceasefire breakdown could reverse the slide rapidly
Brent's slide from $111 to $92.41 — a $19 correction in under a month — is the most consequential external-account development of the quarter. Every dollar off Brent translates to roughly BDT 200cr/month in fuel-import savings, easing both the trade gap and LC margin pressure on bank treasuries. But the correction is demand-driven: global slowdown risk is pulling crude lower on the same vector that will soften H2 garment-export orders. WTI at $88.57 confirms the move is broad-based, not a Brent-specific dislocation. The $90 level is the next technical test; a decisive break below reopens the pre-conflict price range and fundamentally resets the H2 import-cover arithmetic that ALCO books are pricing against.
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