Headlines
Tk 9.38tn FY27 budget lands tomorrow; revenue base and bank governance in focus.
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)
On the Apr MPS, rate holds 10%; the auction front-end eased 30bp as policy sits.
FX Reserves
WATCH
- ◆Whether the front-end easing extends at the next auction post-budget
- ◆Reserves trajectory off the $34.55bn 1 May print
- ◆June CPI for power-tariff pass-through after May's 9.42%
RISK
- ▼Tomorrow's Tk 9.38tn budget lifts sovereign supply into the front-end
- ▼Reserves at $34.55bn — import cover 5.86mo and slipping
- ▼A sticky 9.42% May CPI argues against further easing
Banking
On the Mar print, NPL holds 32.26%; governance, not recovery, drives the news.
WATCH
- ◆Bank-level Q1 2026 disclosures — due June
- ◆Islami Bank governance row in Parliament
- ◆10 red notices and the asset-recovery task force — laundered-loan traceability
RISK
- ▼CAR 844bp below floor on the Sep 2025 read — solvency hole unchanged
- ▼Tomorrow's Tk 9.38tn budget tilts borrowing toward banks — sovereign crowding
- ▼Governance contests displacing balance-sheet repair
The capital arithmetic is frozen, and the day's flow around it is political, not financial. NPL holds 32.26% on the Mar 2026 print while CAR (Capital Adequacy Ratio) sits 1.56% on the Sep 2025 read — 844bp below the 10% floor; the bad-loan share has eased but solvency never followed, still write-off and reclassification rather than borrowers curing. The fresh signals are governance: an Islami Bank ownership row reached Parliament, CPD pressed macro reform, and the state issued 10 red notices with an asset-recovery task force. None of it closes the hole. Demand is no help — private credit growth read 6.03% in February — and tomorrow's Tk 9.38tn budget tilts borrowing further toward banks. 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 covers the gap as reserves ease to $34.55bn.
External Flow Balance
May remittance held $3.43bn, over-covering the $2.26bn trade gap; reserves eased to $34.55bn as exports stayed $3.12bn, -7% YoY.
Remittance has held the $3.43bn May step since the $3.13bn run through April; reserves down from the 1 Apr $35.11bn.
Treasury: cover holds for now, but the June–July seasonal dip and the $34.55bn reserve slip are the next drains — keep import-payment timing tight.
WATCH
- ◆June–July seasonal remittance dip after the $3.43bn May print
- ◆Reserves trajectory off $34.55bn — import cover 5.86mo
- ◆$564m Japan/AIIB budget support as a reserves cushion
RISK
- ▼Reserves eased to $34.55bn from the 1 Apr $35.11bn — cover 5.86mo
- ▼Post-Eid seasonal dip narrows the remittance cover
- ▼Brent at $92.40 — pass-through into import-payment lines
DSE Markets
DSEX +0.67% to a record 5,519.49; breadth flips 246/100, turnover recovers.
DSEX Index
DSEX rose 0.67% to a record 5,519.49; breadth flipped to 246/100 from 102/248 and turnover recovered to BDT 1,388cr from BDT 1,072cr.
A fresh record above the 5,516.16 high set 8 Jun; breadth reverses one session after the 102/248 rollover.
Risk/equity desk: the front-end fall re-armed the bid — hold large-cap quality; a turnover break below BDT 1,000cr signals the relief has stalled.
WATCH
- ◆Tomorrow's Tk 9.38tn budget — supply test for the front-end relief
- ◆Whether turnover holds above BDT 1,300cr
- ◆Next T-Bill cut-offs post-budget — the front-end tell
RISK
- ▼Budget supply pulls liquidity from the board into govt paper
- ▼A 9.42% May CPI still caps how far the front-end can ease
- ▼Two-session reversals signal a tape trading headlines, not fundamentals
The distribution call got faded in one session. DSEX rose 0.67% to 5,519.49 — a fresh record above the 5,516.16 high — and this time the internals confirmed: breadth flipped to 246 advancing against 100 declining from 102/248, turnover recovered to BDT 1,388cr from BDT 1,072cr, DS30 lifted to 2,080 from 2,069. The rally was always a rates trade, and rates moved its way — the latest auction cut the front-end, 364d T-Bill cut-offs to 10.20% from 10.50% and the 91d to 10.07%, a bull-steepener that trims the discount on equity cash-flows and eases the deposit competition that had pulled money onto the board. May CPI at 9.42% caps how far this runs, and tomorrow's Tk 9.38tn budget brings supply that competes for the same liquidity. The desk holds large-cap quality and treats a turnover break back below BDT 1,000cr as the signal the front-end relief has stalled.
T-Bonds & T-Bills
Auction cut the front-end 30bp — 364d to 10.20%, 91d to 10.07%; long end anchored.
BD Govt Yield Ladder
The front-end fell at auction — 91d T-Bill to 10.07% from 10.15%, 364d to 10.20% from 10.50%; the 10y held 10.91%.
The 91d had held 10.15% for thirteen straight reads before this cut; the long end unmoved at 10.91%.
ALCO: a bull-steepener re-armed the DSE rally and compresses short-book margin; watch the first post-budget auction for whether the cut holds.
WATCH
- ◆Next auction cut-offs post-budget — whether the front-end fall extends
- ◆Tk 9.38tn budget supply against the lower front-end
- ◆June CPI for whether 9.42% forces the front-end back up
RISK
- ▼Tk 9.38tn budget tilts borrowing to banks — supply re-steepens the front-end
- ▼Bull-steepener compresses NIM on ALM (Asset-Liability Management) books
- ▼A 9.42% May CPI re-arms the front-end if it persists
The curve finally validated the equity bid. At the latest auction, cut-offs fell across the short end — the 91d T-Bill to 10.07% from 10.15%, the 182d to 10.17% from 10.41%, the 364d to 10.20% from 10.50% — while the 5y held 10.78% and the 10y 10.91%. That is a bull-steepener: the front-end dropped ~30bp against an unmoved long end, widening the 364d–10y spread to 71bp from 41bp. The mechanism matters more than the move — a falling front-end cuts the discount on equity cash-flows and shrinks the risk-free return that had pulled deposit money onto the DSE board, which is why DSEX reclaimed its record. For ALCO, the shift compresses margin on short-funded books even as it lifts asset prices. The risk runs the other way tomorrow: the FY27 budget's borrowing tilt toward banks re-steepens the front-end, and a sticky 9.42% May CPI is the second. Watch the first post-budget auction.
Macro & Inflation
On the Mar print, 12m-avg 8.6% — lowest since Mar 2023; May's 9.42% caps easing.
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%.
12m-avg at lowest since Mar 2023 (8.4% then), but the May spike flags the average turning back up.
MPC: the disinflation read has stalled, yet the auction front-end eased 30bp — the desk is pricing the 9.42% spike as the peak, not a trend.
WATCH
- ◆The June CPI print for power-tariff pass-through
- ◆Whether the front-end easing pre-empts the next MPS
- ◆Non-food above 9% as the stickiness tell
RISK
- ▼May's 9.42% headline re-steepens the front-end if it persists
- ▼Power-tariff hike compounds the June CPI
- ▼Private credit at 6.03% signals weak demand transmission
Remittance
Remittance holds the $3.43bn May step; June–July seasonal dip the watch.
Remittance Inflow
WATCH
- ◆June–July seasonal pattern — pre-Eid inflows now past
- ◆Whether the $3.43bn pace holds into the dip
- ◆Reserves at $34.55bn — remittance is the swing variable
RISK
- ▼Post-Eid seasonal dip typical in Jun–Jul
- ▼Informal-channel share widens if a kerb premium opens
Commodities
Gold fell $93 to $4,257.90; 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 after the $93 drop
RISK
- ▼LNG spike on monsoon power demand lifts Petrobangla off-take costs
- ▼Gold reversal signals risk-on rotation away from haven assets
Fiscal
FY27's Tk 9.38tn budget lands tomorrow; bank borrowing already past the FY26 ceiling.
NBR Tax Revenue
NBR collection stepped up to BDT 3.27tn YTD from BDT 2.88tn, lifting the monthly run-rate, though the pace still trails the FY26 target.
The BDT 3.27tn YTD level has held for the last nine reads after the step up from BDT 2.88tn.
Treasury/ALCO: a firmer run-rate trims the deficit at the margin, but tomorrow's Tk 9.38tn budget and the +8% bank-borrowing tilt keep crowding pressure on.
WATCH
- ◆Tomorrow's Tk 9.38tn budget — deficit-financing mix
- ◆FY27 bank-borrowing line against the BDT 1.25tn YTD run
- ◆NBR collection pace vs the full-year target
RISK
- ▼Revenue-to-GDP near the world's lowest caps domestic financing
- ▼Crowding-out as the sovereign competes for bank funding
- ▼Oil-driven Tk42,600cr subsidy add if the energy premium holds
Iran War & Oil
Brent eased to $92.40, WTI below $90 at $89.11; the $90 line gives way.
Brent Crude
Brent eased to $92.40 from $94.35, WTI broke $90 to $89.11 — the slide resumed, spot ~$19 below the May $111 peak.
WTI's first close below $90 in the move; the May $111 peak now sits ~$19 above spot.
Treasury: the pullback trims the fuel bill, but a 9.42% May CPI leaves no cost-push cushion — watch for a $90 break to hold.
WATCH
- ◆A sustained break below $90 versus a $95 retest
- ◆Oil pass-through into the June CPI print
- ◆Khosru's Tk42,600cr subsidy flag if the premium returns
RISK
- ▼Renewed supply premium if the ceasefire frays — Tk42,600cr subsidy tail
- ▼Any bounce re-arms the import bill into a 9.42% CPI
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