Headlines
May CPI jumps to 9.42%; credit slows to 4.75% as the budget borrows more.
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%; May's 9.42% CPI ends the cut debate for now.
FX Reserves
WATCH
- ◆FY27 budget bank-borrowing line — banks +8%, savings tools +20%
- ◆Apr private credit at 4.75% as the demand tell
- ◆Whether the 9.42% May print forces a hawkish hold at the next MPS
RISK
- ▼Power-tariff hike compounds the May CPI jump to 9.42%
- ▼Reserves stale on the 1 Apr $35.11bn print — refresh lagging
Banking
On the Mar print, NPL holds 32.26%; CAR stuck 844bp below floor.
WATCH
- ◆Bank-level Q1 2026 disclosures — due June
- ◆Whether the call for a banking reform commission gains traction
- ◆Apr private credit at 4.75% — weakest demand in the cycle
RISK
- ▼CAR 844bp below floor on the Sep 2025 read — solvency hole unchanged
- ▼Sovereign crowding as FY27 lifts bank borrowing +8%
- ▼Credit growth at 4.75% squeezes earning-asset expansion
The capital arithmetic has not moved, and now the asset side is shrinking around it. NPL holds 32.26% on the Mar 2026 print while CAR sits 1.56% on the Sep 2025 read — 844bp below the 10% floor; the bad-loan share eased but solvency never followed, which still reads as write-off and reclassification, not borrowers curing. The fresh signal is demand: private credit growth fell to 4.75% in April, the weakest in the cycle, so banks are not out-growing the problem. The FY27 budget tilts borrowing +8% toward banks, pulling capacity toward the sovereign and away from a private book already stalling. 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 May exports hold $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 funds the gap, but May exports -7% and the June–July dip are fresh drains — watch import-payment timing as Brent retests $95.
WATCH
- ◆June–July seasonal remittance dip on reserve cover
- ◆IMF programme size and conditionality timeline
- ◆Brent back to $95.59 — pass-through into import-payment lines
RISK
- ▼May exports -7% narrow the surplus cushion
- ▼Brent's bounce to $95.59 widens the import bill
DSE Markets
Fresh high to 5,516 on BDT 1,529cr — but breadth thins to 184/160.
DSEX Index
DSEX hit a fresh high at 5,516.16, +0.75% — turnover rose to BDT 1,529cr, but breadth narrowed to 184/160, DS30 up to 2,087.
Clears yesterday's 5,475.00 record on heavier turnover, but advancers fell from 242 the prior session.
Risk/equity desk: a narrowing advance is a distribution tell — trim the broad board, hold large-cap quality while turnover stays above BDT 900cr.
WATCH
- ◆Whether turnover holds above BDT 900cr to sustain the base
- ◆Breadth — a narrowing advance is a late-stage tell
- ◆Front-end T-Bill cut-offs at the next auction post-budget
RISK
- ▼May CPI at 9.42% shuts the MPC cut window the rally priced
- ▼Budget supply or a fresh tax surprise hits sentiment
- ▼Narrowing breadth signals the broad market rolling over
The board made another fresh high — and the trade under it just lost its premise. DSEX printed 5,516.16, +0.75%, on turnover up to BDT 1,529cr, clearing yesterday's 5,475.00. But the internals turned: breadth narrowed to 184/160 from 242/104, and DS30 firmed to 2,087 — the index is being pulled up by large caps while more than 160 names fell. A narrowing advance on rising turnover is distribution, not accumulation. The rally was always a rates trade — a flat curve at 10.91% and a front-end pinned at 10.15% cut the discount on equity cash-flows. May CPI at 9.42%, a 16-month high, removes the MPC's room to cut and threatens that front-end step-down. The desk stays constructive only while turnover holds above BDT 900cr, but trims the broad board into the narrowing and keeps weight in large-cap quality ahead of the budget print.
T-Bonds & T-Bills
Front-end steady at 10.15%; curve flat at 10.91% — May CPI the steepening 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.
Front-end stepped lower since late April and has held flat for fifteen straight reads.
ALCO: the flat front-end fed the equity rally, but May CPI at 9.42% and FY27 supply are reversal risks — watch the next cut-offs.
WATCH
- ◆Next auction cut-offs — first tell post-budget
- ◆FY27 borrowing mix — banks +8%, savings tools +20%
- ◆Whether the 9.42% May CPI forces the front-end higher
RISK
- ▼Fiscal crowding as borrowing tilts +8% to banks
- ▼Flat curve compresses NIM on ALM books
- ▼Inflation re-acceleration re-steepens the front-end
The flat curve is pricing two things at once — last week's equity re-rating and this week's budget supply — and an inflation print just complicated both. The 91d T-Bill has held 10.15% and the 364d 10.50% since late April, with the 5y at 10.78% and the 10y 10.91% — a 5y–10y spread of just 13bp. That near-flat, lower front-end is the mechanism under the DSEX breakout: it cut the discount on equity cash-flows and pushed deposit money toward the board. It cuts the other way for banks, compressing the term spread that funds NIM on ALM books. Now both the supply and the price level point to steepening. The FY27 budget lifts bank borrowing 8% and savings-tool borrowing 20%, and May CPI at 9.42% — a 16-month high — removes the cover for a lower front-end. ALCO watches the next auction cut-offs for the first sign the floor gives way.
Macro & Inflation
On the Mar print, 12m-avg 8.6%; May headline jumped to 9.42%, a 16-month high.
CPI Trend
CPI 12m-avg holds 8.6% on the Mar print, food 8.24%, non-food 9.09% — but the May headline P2P spiked to 9.42%, a 16-month high.
12m-avg at lowest since Mar 2023 (8.4% then), but the May spike flags the average turning up.
MPC: the disinflation read is over — a confirmed tariff hike and 9.42% May CPI shut the cut window; expect a hawkish hold.
WATCH
- ◆Apr private credit at 4.75% — the demand collapse
- ◆Whether the May 9.42% spike forces a hawkish hold
- ◆Power-tariff pass-through into the June CPI print
RISK
- ▼Power-tariff hike compounds the May CPI jump to 9.42%
- ▼Non-food above 9% constrains any MPC easing
- ▼Private credit at 4.75% signals demand destruction
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 on worker headcount
RISK
- ▼Post-Eid seasonal dip typical in Jun–Jul
- ▼Informal-channel share widens if a kerb premium opens
Commodities
Gold firmed to $4,344/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
FY27 lifts bank borrowing 8%, savings-tool 20%; crowding pressure builds.
NBR Tax Revenue
WATCH
- ◆FY27 deficit-financing mix — banks +8%, savings tools +20%
- ◆NBR collection pace against the full-year target
- ◆Tariff cuts on 250 lines and the revenue offset
RISK
- ▼Crowding-out as the sovereign competes for bank funding
- ▼Borrowing past ceiling pressures the T-Bill curve into FY27
Iran War & Oil
Brent rebounded to $95.59 from $93.09; the $90 break stalls, cost-push firms.
Brent Crude
Brent rebounded to $95.59, WTI $92.84 — up ~$2.50 from $93.09, but still ~$15 below the May $111 peak.
The slide toward $90 reversed; spot back into the mid-$90s, the May $111 peak ~$15 above.
Treasury: the bounce re-arms the dollar fuel bill into a 9.42% May CPI — watch a $95 retest over a $90 break.
WATCH
- ◆A $95 retest now back in play versus the $90 line
- ◆Oil pass-through into the June CPI print
- ◆OPEC+ June production decision
RISK
- ▼Brent's bounce re-arms the import bill into a 9.42% CPI
- ▼Renewed supply premium if the ceasefire frays
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