Headlines
Fiscal stress and weak Eid sales led a thin holiday-week 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 at 10%; corridor intact, 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
NPL frozen at 35.73%, CAR at 1.56% — no resolution path visible.
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% held static through the week — unchanged for three consecutive quarters, confirming the system has settled at this structural impairment level. CAR at 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. The week's fiscal headline — government bank borrowing past its annual ceiling at BDT 0.92tn — compounds the stress by crowding private-sector access to bank funding. Q1 2026 disclosures due in June will show whether any bank-level capital improvement is emerging beneath the system aggregate. Without a recapitalization roadmap from BB, provisioning shortfalls compound each quarter and erode depositor confidence.
FX & External
Stable at 122.75 all week; remittance covers the trade gap.
External Flow Balance
USD/BDT flat at 122.75 all week, reserves at $35.1bn — remittance $3.13bn nearly offsets $2.26bn trade gap.
Reserves up $0.99bn WoW to $35.1bn; USD/BDT anchored through May 2026 Eid holiday week.
Treasury: post-Eid import-payment surge is the first stress test on the 122.75 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
No trading since 21 Apr — gap risk dominates reopening setup.
DSEX Index
DSEX at 5,257 on last session 21 Apr — market dark for full Eid week, zero price discovery.
No trading since pre-Eid close; BSEC governance code review pending as post-holiday catalyst.
Risk: 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 to 10.15%; curve flat at 10.91% through 10y.
BD Govt Yield Ladder
91d T-Bill at 10.15%, 364d at 10.50% — front-end compression of 15–19bp over the week.
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 borrowing accelerates in Q4 FY26
- ▼Flat curve suppresses net interest margin for ALM (Asset-Liability Management) books
Macro & Inflation
CPI 12m avg at 8.6%, non-food sticky — real rate thin at +1.29%.
CPI Trend
CPI 12m avg at 8.6%, food at 8.24%, non-food at 9.09% — disinflation trend intact but pace slowing.
CPI 12m avg at lowest since Mar 2023 (8.4% then). Non-food at lowest since Feb 2026 (9.0% then).
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 the banking system
Remittance
Remittance at $3,130mn covers the trade gap through Eid.
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 at $4,524/oz, LNG at $15/MMBtu — monsoon demand the watch.
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
BDT 0.92tn bank borrowing in nine months — ceiling breached.
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
Government bank borrowing at BDT 0.92tn crossed the full-year ceiling in nine months — the week's most important domestic fiscal signal. NBR collection at BDT 2.88tn trails implied annual needs, forcing the government to lean harder on the banking system for deficit financing. The fiscal-monetary nexus is tightening: accelerating government demand for bank funding compresses the pool available for private credit, which at 6.03% YoY is already subdued. With the FY27 budget announcement expected in June, the desk needs to assess whether the new fiscal plan addresses the structural revenue shortfall or merely rolls it forward. T-Bill rates eased 15–19bp this week, but sustained government borrowing at this pace is the clearest reversal catalyst.
Iran War & Oil
Brent −$19 from peak to $92.41 — demand-driven slide defines the week.
Brent Crude
Brent at $92.41, extending the demand-driven slide from May $111 peak — WTI tracking at $88.57.
Second week of decline from $111 peak; $90 is the next key technical support 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 — roughly $19 off the May peak — is the most consequential external-account development of the quarter for Bangladesh. 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. The correction is demand-driven: global slowdown signals pull crude lower on the same vector that will soften H2 garment-export orders. WTI at $88.57 confirms the move is broad-based, not Brent-specific. The $90 level is the next technical test; a decisive break below reopens the pre-conflict price range and resets the H2 import-cover arithmetic that ALM books are pricing against.
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