Headlines
Budget session opens; the board breaks to a new high as the cut-debate sharpens.
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)
Rate holds 10% on the Apr print; the energy-shock cut debate sharpens.
FX Reserves
WATCH
- ◆FY27 budget deficit-financing mix — session opens 07 Jun
- ◆Apr CPI print for tariff pass-through
- ◆SDF utilisation as the excess-liquidity tell
RISK
- ▼Power-tariff hike lifts CPI and thins the +1.29% real rate
- ▼Reserves print lagging — last refreshed 1 Apr
Banking
On the Mar print, NPL holds 32.26%; CAR stuck 844bp below floor.
WATCH
- ◆Bank-level Q1 2026 disclosures — due June
- ◆Whether write-offs or recovery drove the 347bp drop
- ◆Any BB recapitalisation roadmap for state lenders
RISK
- ▼CAR still 844bp below floor — solvency hole unchanged
- ▼Sovereign crowding as govt bank borrowing runs to BDT 1.25tn
- ▼Headline NPL drop may mask reclassification, not recovery
The capital arithmetic has not moved, and the budget session that opens today is where it gets tested. NPL holds 32.26% on the Mar 2026 print — down 347bp off 35.73% — yet CAR sits 1.56% on the Sep 2025 read, 844bp below the 10% floor: the bad-loan share fell, solvency did not. That gap still reads as write-off and reclassification clearing the stock, not borrowers curing. The fiscal channel works against repair — government bank borrowing has run to BDT 1.25tn, past its FY26 ceiling, and the FY27 financing mix tabled this week decides how much more is pulled toward the sovereign and away from private credit already subdued at 6.03% YoY. The desk holds no fresh state-lender or stressed-private exposure and treats the bank-level Q1 2026 disclosures, due June, as the only print that separates write-off from recovery.
FX & External
Peg holds 122.75; remittance $3.13bn covers the $2.26bn gap into the seasonal dip.
External Flow Balance
USD/BDT flat at 122.75; remittance $3.13bn covers the $2.26bn trade gap as the May export print holds at $3.12bn, down 7% YoY.
USD/BDT unmoved since the April band reset; reserves and the May export print are the freshest reads.
Treasury: remittance still funds the gap, but May exports -7% and the June–July dip are fresh drains — watch import-payment timing.
WATCH
- ◆June–July seasonal remittance dip on reserve cover
- ◆IMF programme size and conditionality timeline
- ◆Brent pass-through into post-Eid import-payment lines
RISK
- ▼May exports -7% narrows the surplus cushion
- ▼Power-tariff hike widens the import bill
DSE Markets
Breakout confirmed — DSEX to 5,475 on BDT 1,352cr, breadth 242/104.
DSEX Index
DSEX confirmed the breakout at 5,475.00, +0.61% — turnover rose to BDT 1,352cr, breadth 242/104, DS30 up to 2,068.
Clears last Thursday's 5,441.66 high; turnover above BDT 900cr for a fourth straight session.
Risk/equity desk: volume confirms the base — add while turnover holds above BDT 900cr; trim consumer counters into today's budget session.
WATCH
- ◆Whether turnover holds above BDT 900cr to sustain the base
- ◆Front-end T-Bill cut-offs at the next auction
- ◆Consumer counters against the confirmed power-tariff hike
RISK
- ▼Budget-session supply or a fresh tax surprise hits sentiment
- ▼Tariff hike squeezes consumer-counter margins even as Brent eases
- ▼A flat curve caps the bank-counter re-rating
The breakout is now confirmed, and it is a rates trade. DSEX printed 5,475.00 at today's close, +0.61%, clearing last Thursday's 5,441.66 on turnover up to BDT 1,352cr with breadth 242/104 — follow-through on volume, not thin-float drift. The driver sits in the curve: the 91d T-Bill has held its lower step at 10.15% since late April and the 5y–10y runs flat at 10.91%, so the discount on equity cash-flows eased while bank deposits pay less, and cheaper short money found the board. Two checks now frame the carry. The budget session opens today — any fresh tax surprise or financing-mix shock in the FY27 statement is the near-term sentiment risk. And cost-push lingers in consumer counters even as Brent eases to $93.09. The desk stays constructive while turnover holds above BDT 900cr, but trims cost-sensitive consumer names into the budget print.
T-Bonds & T-Bills
Front-end steady at 10.15%; curve flat at 10.91% — fiscal pace the risk.
BD Govt Yield Ladder
91d T-Bill held 10.15%, 364d 10.50%; the curve runs near-flat through 10y at 10.91%, the 5y–10y spread just 13bp.
Short-end stepped lower since late April — 91d off 10.17%, 364d off 10.65%; the curve flat for a seventh read.
ALCO: front-end easing supports roll-down and lifts equity multiples — watch the FY27 budget borrowing pace, now BDT 1.25tn, for reversal risk.
WATCH
- ◆Next auction sizes for the demand signal
- ◆Govt bank-borrowing pace into the FY27 budget — session opens 07 Jun
- ◆Front-end cut-offs at the next auction
RISK
- ▼Fiscal crowding as borrowing runs to BDT 1.25tn
- ▼Flat curve compresses NIM on ALM books
The flat curve is doing double duty this week — pricing the equity re-rating and bracing for budget supply. The 91d T-Bill has held 10.15% and the 364d 10.50% on the lower step set in late April, while the 5y sits 10.78% and the 10y 10.91% — a 5y–10y spread of just 13bp. That near-flat profile is the mechanism under the DSEX breakout: a steady, lower front-end cut the discount on equity cash-flows and pushed deposit money toward the board. It cuts the other way for banks — a flat curve compresses the term spread that funds NIM on ALM (Asset-Liability Management) books. The risk is supply. Government bank borrowing has run to BDT 1.25tn, past the FY26 ceiling, and the FY27 financing mix tabled this week could re-steepen the front-end if the deficit leans on T-Bills. ALCO watches the next auction cut-offs for the first tell.
Macro & Inflation
On the Mar print, CPI 12m-avg 8.6%; the confirmed tariff hike the forward risk.
CPI Trend
CPI 12m-avg holds 8.6% on the Mar print, food 8.24%, non-food 9.09% — disinflation intact but the non-food leg stays sticky above 9%.
CPI 12m-avg at lowest since Mar 2023 (8.4% then); non-food lowest since Feb 2026 (9.0% then).
MPC: a confirmed power-tariff hike is a cost-push risk even as Brent eases to $93 — watch the Apr CPI print before any easing tilt.
WATCH
- ◆Apr 2026 CPI print from BBS for tariff pass-through
- ◆Private-credit trajectory — 6.03% YoY is subdued
- ◆Whether Brent's slide to $93 offsets the tariff cost-push
RISK
- ▼Power-tariff hike reverses food-led disinflation
- ▼Non-food above 9% constrains MPC easing flexibility
Remittance
Remittance holds $3.13bn, covering the trade gap; the June–July dip the watch.
Remittance Inflow
WATCH
- ◆June–July seasonal pattern — pre-Eid inflows now past
- ◆May print confirmation from BB
- ◆Gulf 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 eased to $4,337/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
- ▼Gold reversal signals risk-on rotation
Fiscal
Budget session opens; bank borrowing past ceiling at BDT 1.25tn.
WATCH
- ◆FY27 budget deficit-financing mix — tabled this week
- ◆NBR collection pace against the full-year target
- ◆Proposed tariff cuts on ~350 items and the revenue offset
RISK
- ▼Private-credit crowding-out as the sovereign competes for bank funding
- ▼Borrowing past ceiling pressures the T-Bill curve into FY27
Iran War & Oil
Brent eased to $93.09, nearing $90; cost-push softens into the next CPI print.
Brent Crude
Brent eased to $93.09, WTI $90.54 — down ~$2 from Friday's $95.21, now ~$18 below the May $111 peak.
Through the mid-$90s and toward $90; the May $111 peak still ~$18 above the spot.
Treasury: the oil relief trims the dollar fuel bill, but a confirmed power-tariff hike keeps cost-push armed — watch a $90 break or a $95 retest.
WATCH
- ◆A $90 break versus a $95 retest as the next thresholds
- ◆Oil pass-through into the next BBS CPI print
- ◆OPEC+ June production decision
RISK
- ▼Renewed supply premium if the ceasefire frays
- ▼Domestic tariff hike offsets the oil relief in the CPI print
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