Headlines
Day-two budget reaction critical; depositor reassurance lands against the sector's capital hole.
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 cut window stays shut.
FX Reserves
WATCH
- ◆First post-budget T-Bill auction — whether the offshore tilt keeps domestic supply curbed
- ◆June CPI for power-tariff pass-through after May's 9.42%
- ◆Reserves trajectory off the $34.55bn 1 May print
RISK
- ▼FY27 domestic borrowing target vs the BDT 1.25tn YTD run — if it returns, the front-end re-steepens
- ▼Reserves at 5.86mo import cover and slipping
- ▼Sticky 9.42% May CPI argues against further easing
Banking
On the Q1 print, NPL holds 32.26%; the budget eased crowding, not capital.
WATCH
- ◆Bank-level Q1 2026 disclosures — due June, the only write-off-vs-recovery tell
- ◆Whether less domestic deficit financing frees bank balance-sheet capacity
- ◆Islami Bank governance row — unresolved
RISK
- ▼CAR 844bp below floor on the Sep 2025 read — solvency hole unchanged
- ▼Capital repair still write-off and reclassification, not borrowers curing
- ▼Private credit at 6.03% — weak demand transmission
The day's banking story is reaction, not data. The budget cleared Thursday; today's tape is the second-day read — CPD flags the black-money real-estate window as a tax-fairness breach, officials tell depositors there is nothing to worry about. Neither touches the capital ledger. NPL holds 32.26% on the Q1 print — down 347bp off 35.73%, but the move is write-off and reclassification, not borrowers curing — and CAR sits 1.56% on the Sep read, 844bp below the 10% floor. The FY27 offshore-financing tilt eases the crowding that ran govt bank borrowing to BDT 1.25tn YTD, freeing some balance-sheet room; it does nothing for solvency. Private credit growth at 6.03% confirms the binding constraint is capital, not appetite. The book holds no fresh state-lender or stressed-private exposure and treats the Q1 bank disclosures, due June, as the only print separating write-off from recovery.
FX & External
Peg holds 122.75; remittance covers the gap as the June–July dip nears.
External Flow Balance
Reserves hold $34.55bn as May remittance over-covers the $2.26bn trade gap; exports stay $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, but the June–July seasonal dip and the budget's offshore tilt are the swing — 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
- ◆External-financing inflows as the budget leans offshore
RISK
- ▼Reserves eased to $34.55bn from $35.11bn — cover 5.86mo
- ▼Export base shrinking — $3.12bn, −7% YoY
- ▼Offshore-financing tilt lifts FX-denominated debt service
DSE Markets
Non-trading day; the 5,519.49 record stands, post-budget reopen Sunday the test.
DSEX Index
DSEX holds its 5,519.49 record (set 10 Jun) into the weekend; no fresh print — the market was shut Fri–Sat.
The record set 10 Jun stands above the prior 5,516.16 high; the tape carried flat into Thursday's budget.
Equity desk: hold large-cap quality into Sunday's reopen — the budget's financing mix is the catalyst; turnover below BDT 1,000cr signals relief stalling.
WATCH
- ◆Sunday's reopen — the first session to price the full FY27 budget
- ◆First post-budget T-Bill auction — the front-end tell for the equity bid
- ◆Whether turnover holds above BDT 1,300cr on the reopen
RISK
- ▼Budget supply pulls liquidity into govt paper if borrowing stays domestic
- ▼A 9.42% May CPI caps how far the front-end can ease
- ▼Record tape — stretched valuations if the relief stalls
T-Bonds & T-Bills
The 5y holds 10.37% post-budget; the 10y richened 5bp — front-end cuts intact.
BD Govt Yield Ladder
The 5y holds 10.37% post-budget off a 12-read flat 10.78%; the front-end keeps its cuts (364d 10.20%), the 10y richened 5bp to 10.91%.
The 5y held 10.78% for twelve straight reads before the budget's 43bp rally; the 10y's uptick reverses to 10.91%.
ALCO: the belly bid still prices the offshore-financing tilt — watch the first post-budget auction for whether domestic supply returns.
WATCH
- ◆First post-budget auction — whether the offshore tilt durably curbs domestic supply
- ◆10y at 10.91% — long-end term premium if external borrowing lifts FX risk
- ◆June CPI — whether 9.42% forces the front-end back up
RISK
- ▼If domestic borrowing returns despite the budget, the belly gives back the rally
- ▼Bull move compresses NIM on short-funded ALM (Asset-Liability Management) books
- ▼Long-end supply concern if external borrowing lifts FX risk
Macro & Inflation
On the Mar print, 12m-avg 8.6%, lowest since Mar 2023; credit stuck at 6.03%.
CPI Trend
CPI 12m-avg held 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; the auction front-end still eased through budget week, pricing the 9.42% spike as the peak, not a trend.
WATCH
- ◆June CPI for power-tariff pass-through after May's 9.42%
- ◆Non-food above 9% as the stickiness tell
- ◆Private credit at 6.03% — whether the front-end cuts revive demand
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 $3.43bn; pre-Eid inflows past, the June–July dip is the next test.
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 the swing variable
RISK
- ▼Post-Eid seasonal dip typical in Jun–Jul
- ▼Informal-channel share widens if a kerb premium opens
Commodities
Gold eased to $4,239 on the haven unwind; LNG $15/MMBtu on the Apr print.
WATCH
- ◆LNG spot for Jun–Aug monsoon-demand pricing
- ◆Gold as a global risk-sentiment proxy after the haven unwind
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 draws CPD fire on black money; financing leans offshore.
NBR Tax Revenue
NBR collection holds BDT 3.27tn YTD after the step from BDT 2.88tn, lifting the run-rate, though the pace still trails the FY26 target.
The BDT 3.27tn YTD level has held for the last eleven reads after the step up from BDT 2.88tn.
Treasury/ALCO: a firmer run-rate trims the deficit at the margin, but Thursday's Tk 9.38tn budget and the offshore tilt reset the borrowing math.
WATCH
- ◆FY27 domestic borrowing target against the BDT 1.25tn YTD run
- ◆First post-budget auction — the deficit-financing mix in practice
- ◆NBR collection pace vs the full-year target
RISK
- ▼Black-money real-estate window — CPD flags a tax-fairness and AML breach
- ▼Offshore tilt lifts FX-denominated debt service even as it eases bank crowding
- ▼Revenue-to-GDP near the world's lowest caps domestic financing
The budget's second day belonged to its critics. CPD's verdict is the sharpest — the black-money real-estate window, legalising undisclosed wealth at a flat rate, breaks tax fairness and cuts against the AML posture banks must enforce; the NBR chairman is already signalling a review of the mandatory TIN rule. The arithmetic is unchanged: Tk 9.38tn against a revenue base near the world's lowest, with financing pivoting offshore — more abroad, less at home. That eases the crowding that ran govt bank borrowing to BDT 1.25tn YTD, past the FY26 ceiling; the relief showed as the 5y rallied 43bp last week. But the tilt trades bank crowding for FX-denominated debt service against a $34.55bn reserve base and a shrinking export line. NBR at BDT 3.27tn YTD trails target. The desk reads the domestic-borrowing line as the swing for both the front-end and the equity bid.
Iran War & Oil
Brent fell to $86.71 — the pullback eases the import bill into sticky CPI.
Brent Crude
Brent slid to $86.71 and WTI to $84.29, extending the break below $90 — spot ~$24 below the May $111 peak.
The break below $90 deepened to $86.71; the May $111 peak now sits ~$24 above spot.
Treasury: the slide trims the fuel bill, but a 9.42% May CPI leaves no cost-push cushion — watch the $85 line.
WATCH
- ◆Whether Brent holds below $90 or retests $95
- ◆Oil pass-through into the June CPI after May's 9.42%
- ◆Tk42,600cr subsidy flag if the premium returns
RISK
- ▼Any bounce re-arms the import bill into a 9.42% CPI
- ▼Renewed supply premium if the ceasefire frays — Tk42,600cr subsidy tail
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