Headlines
Fresh leads scarce post-Eid; the banking capital freeze still leads.
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% on the Apr MPS; next print the catalyst.
WATCH
- ◆Next MPS date and forward rate guidance
- ◆SDF utilisation as the excess-liquidity tell
RISK
- ▼Real policy rate at +1.29% thins if CPI reaccelerates
- ▼Reserves print lagging — last refreshed 1 Apr
Banking
NPL frozen at 35.73%, CAR 844bp below floor — no resolution path.
WATCH
- ◆Q1 2026 bank-level disclosures — due June
- ◆Any BB recapitalisation roadmap for state lenders
RISK
- ▼CAR 844bp below floor implies open-ended forbearance
- ▼Provisioning shortfall compounds each quarter without fresh capital
The credit cycle here is not turning — it has stopped. NPLs hold 35.73% for a third consecutive quarter on the Q4 2025 print, and CAR at 1.56% leaves the system 844bp short of the Basel III 10% floor. That gap is not a buffer drawdown; it is a structural solvency hole that only regulatory forbearance keeps off the front page. The fiscal channel makes it worse: government bank borrowing past its full-year ceiling at BDT 0.92tn pulls scarce balance-sheet capacity toward the sovereign and away from a private-credit pulse already subdued at 6.03% YoY. The mispricing sits in deposit pricing — savers fund a system whose aggregate capital is functionally negative. The desk holds no fresh exposure to state-lender counterparty lines and treats Q1 2026 disclosures, due June, as the only near-term catalyst that can change the call.
FX & External
Stable at 122.75; remittance still covers the trade gap.
External Flow Balance
USD/BDT flat at 122.75, reserves $35.1bn — remittance $3.13bn nearly offsets the $2.26bn monthly trade gap.
USD/BDT unmoved since the Apr band reset; reserves +$0.99bn WoW on the 1 Apr print.
Treasury: post-Eid import-payment surge is the first stress test on the 122.75 range — watch reserve drawdown.
WATCH
- ◆Post-Eid LC-settlement surge on import lines
- ◆Reserves holding above $35bn through H2
RISK
- ▼Seasonal import demand could test the 122.75 band
- ▼Trade gap widens if Brent stabilises above $90
DSE Markets
No trading since 21 Apr; gap risk dominates the reopening.
DSEX Index
DSEX held at 5,257 from the 21 Apr session — board dark through the full Eid cycle, zero price discovery.
No trading since the 21 Apr pre-Eid close; reopening still pending as the post-holiday catalyst.
Risk: gap-open on reopening — holiday-period global moves price in at once; expect a wide first print.
WATCH
- ◆Reopening gap as holiday global moves reprice
- ◆Weak Eid retail sales weighing on consumer counters
RISK
- ▼Thin liquidity on the first post-holiday session
- ▼BSEC governance-code implementation timeline
T-Bonds & T-Bills
Front-end at 10.15%; curve near-flat at 10.91% through 10y.
BD Govt Yield Ladder
91d T-Bill at 10.15%, 364d at 10.50% — front-end down 15–19bp; curve near-flat through 10y at 10.91%.
Short-end stepped lower since late April; 10y eased 7bp from 10.98%, 5y–10y spread now 13bp.
ALCO: front-end easing supports roll-down positioning — watch the fiscal borrowing pace for reversal risk.
WATCH
- ◆Next auction sizes for the demand signal
- ◆Govt bank-borrowing pace — already past the annual ceiling
RISK
- ▼Fiscal crowding if borrowing accelerates into Q4 FY26
- ▼Flat curve compresses NIM for ALM (Asset-Liability Management) books
Macro & Inflation
CPI 12m-avg 8.6% on the Mar print; non-food keeps the real rate thin.
CPI Trend
CPI 12m-avg eased to 8.6%, food 8.24%, non-food 9.09% — disinflation intact but the non-food leg is sticky above 9%.
CPI 12m-avg at lowest since Mar 2023 (8.4% then); non-food lowest since Feb 2026 (9.0% then).
MPC: real policy rate at +1.29% supports a hold; watch non-food for the services-stickiness signal into the next MPS.
WATCH
- ◆Apr 2026 CPI print from BBS for disinflation confirmation
- ◆Private-credit trajectory — 6.03% YoY is subdued
- ◆M2–credit divergence as a liquidity-pooling tell
RISK
- ▼Non-food above 9% constrains MPC easing flexibility
- ▼M2 at 10.52% outpacing credit signals liquidity pooling in banks
The disinflation is real but slow: CPI 12m-avg eased to 8.6% on the Mar 2026 print — lowest since Mar 2023 (8.4% then) — yet non-food at 9.09% shows the services leg is not cooperating. That split matters for the credit cycle. Private credit at 6.03% YoY is the weakest pulse in the window, while M2 grows 10.52% — money is being created but pooling in the banking system rather than reaching borrowers. The transmission is broken at the same place the capital is: a system 844bp short on CAR (Capital Adequacy Ratio) cannot lend into a recovery even if the MPC eased. The real policy rate at +1.29% gives nominal room to cut, but with non-food sticky and fiscal borrowing crowding the funding pool, the desk reads the next MPS as a hold. Watch the Apr print for whether food disinflation can pull the headline lower.
Remittance
Remittance at $3,130mn covers the trade gap through Eid.
WATCH
- ◆Jun–Jul seasonal pattern — pre-Eid inflows now past
- ◆GCC labour-policy shifts affecting worker headcount
RISK
- ▼Post-Eid seasonal dip typical in Jun–Jul
- ▼Informal-channel share widens if a kerb premium opens
Commodities
Gold at $4,570/oz; LNG $15/MMBtu on the Apr print — monsoon the watch.
WATCH
- ◆LNG spot for Jun–Aug monsoon-demand pricing
- ◆Gold as a 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 already breached.
WATCH
- ◆FY27 budget — expected June 2026
- ◆NBR restructuring and revenue-mobilisation progress
RISK
- ▼Private-credit crowding-out as the sovereign competes for bank funding
- ▼T-Bill rate reversal if borrowing accelerates post-Eid
Government bank borrowing at BDT 0.92tn has already breached its full-year ceiling — the clearest domestic stress signal feeding the credit cycle. NBR collection at BDT 2.88tn trails the revenue path the budget assumed, so the deficit lands on the banking system rather than on tax receipts. That mechanism is the bridge to the banking story: every taka the sovereign pulls from bank balance sheets is a taka not extended to a private-credit pulse already running at just 6.03% YoY. The front end has eased 15–19bp on excess liquidity, which masks the crowding-out for now — but sustained borrowing at this pace is the cleanest catalyst to reverse the T-Bill rally. With the FY27 budget due in June, the desk's question is whether the new fiscal frame closes the revenue gap or simply rolls it forward onto the same overstretched banks.
Iran War & Oil
Brent −$19 off the May peak to $91.70 — demand-driven.
Brent Crude
Brent at $91.70, extending the demand-driven slide from the May $111 peak — WTI tracking at $87.76.
Third week off the $111 May peak — roughly $19 lower; $90 is the next key support level.
Treasury: falling Brent eases fuel-LC margins — watch a $90 break for an import-cover rerating.
WATCH
- ◆$90 Brent support — the next technical test
- ◆OPEC+ June production decision
- ◆Global PMI for demand confirmation
RISK
- ▼Demand destruction implies weaker H2 2026 garment-order books
- ▼Supply shock or ceasefire breakdown could reverse the slide fast
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