Headlines
Distressed assets and MD-protection rules dominate; China funding tour opens the week.
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)
Policy anchored at 10%; auctions, not BB, did the front-end easing.
FX Reserves
WATCH
- ◆First post-budget T-Bill auction — whether the offshore tilt curbs domestic supply
- ◆June CPI for the budget's VAT/tariff pass-through
- ◆Market USD/BDT against the 122.75 mid
RISK
- ▼Reserve lift is loan-funded — net position softer than the gross $34.55bn
- ▼Sticky non-food CPI at 9.09% argues against a policy cut
- ▼Distressed-asset overhang limits transmission of any easing
Banking
On the Q1 print, NPLs read 32.26% — but 1.56% CAR is the real bind.
WATCH
- ◆Bank-level Q1 2026 disclosures due June — the write-off-vs-recovery split
- ◆Whether the 30.6% reset reconciles with the 32.26% Q1 headline
- ◆Whether any stressed lender tables a capital plan
RISK
- ▼Distressed pile at Tk 10.04tn dwarfs the headline NPL
- ▼CAR 844bp below floor — solvency hole unmoved on the Sep read
- ▼Forbearance reflex (bespoke LC carve-outs) defers loss recognition
Banking leads because the constraint is now visible in the regulator's behaviour, not just the ratios. BB's reset of end-2025 system NPL to 30.6% — below the 32.26% Q1 print, well under the 35.73% peak — flatters a book that hasn't healed: the fall is write-off arithmetic, not cures, and the distressed pile runs to Tk 10.04tn. System CAR at 1.56% on the Sep 2025 read sits 844bp below the 10% floor, so that pile rests on functionally no capital. The tell is forbearance — a bespoke 100% margin LC carve-out to keep one stressed borrower afloat is time bought, not triage forced. It shows in transmission: private credit growth stalled at 6.03% even as the curve rallied post-budget. The desk reads any re-rating in a stressed name as sentiment, not solvency, and stays defensive on bank credit until a recapitalisation plan — not a reclassification — lands.
FX & External
Mid holds 122.75; May remittance covers the trade gap by just $0.39bn.
External Flow Balance
Remittance $3.43bn barely covers the $3.04bn May trade gap; the official mid holds 122.75 as cover over the gap thinned to $0.39bn.
Cover over the gap thinned to $0.39bn from $1.17bn a month earlier; pre-Eid inflow now past.
Treasury: the market/mid spread is the new stress gauge — watch the June–July remittance dip; reserves up but loan-funded.
WATCH
- ◆June–July seasonal remittance dip after the held $3.43bn May print
- ◆Market USD/BDT against the 122.75 mid — the spread is the stress gauge
- ◆Reserve durability as the FY27 budget tilts financing offshore
RISK
- ▼Remittance cover over the gap at $0.39bn — one soft month from negative
- ▼Reserve lift is loan-funded — net softer than the gross $34.55bn
- ▼Budget's offshore tilt adds FX-denominated service to a thinning runway
DSE Markets
Non-trading day; DSEX holds its 10 Jun 5,519.49 record into the reopen.
DSEX Index
DSEX holds its 5,519.49 record (set 10 Jun) — no fresh print into the post-budget reopen on a non-trading Saturday.
The 10 Jun record stands above the prior 5,516.16 high; the tape has carried flat since.
Equity desk: hold large-cap quality into the reopen — the taka slip and 30.6% NPL reset are the new inputs; sub-BDT 1,000cr turnover signals stalling.
WATCH
- ◆The post-budget reopen tape — first session to price the FY27 frame
- ◆Bank-sector reaction to the 30.6% NPL reset and Tk 10.04tn distressed pile
- ◆Whether turnover holds above BDT 1,000cr on the reopen
RISK
- ▼Record tape — stretched valuations if budget relief stalls
- ▼Bank-heavy index exposed to the distressed-loan pile
- ▼Taka near 123.10 pressures import-dependent large-caps
T-Bonds & T-Bills
The curve holds its post-budget rally — front-end below 10%, 10y at 10.24%.
BD Govt Yield Ladder
Curve holds its rally — 91d 9.85%, 364d 10.03%, 5y 10.37%, 10y 10.24%, ~67bp under its pre-budget 10.91%.
The 5y held 10.78% for three reads before the budget rally; the 364d now 10.03% vs 10.50% pre-budget.
ALCO: front-end easing while the external account tightens — fund short, but margins compress on short-funded books; watch supply at the first post-budget auction.
WATCH
- ◆First post-budget T-Bill auction — whether the offshore tilt durably curbs domestic supply
- ◆June CPI — non-food at 9.09% the risk to the front-end bid
- ◆Whether the 10y holds 10.24% or the long-end term premium rebuilds
RISK
- ▼If the FY27 deficit pushes domestic borrowing back, the curve gives back the rally
- ▼Bull move compresses margins on short-funded ALM (Asset-Liability Management) books
- ▼Sticky non-food CPI re-steepens the curve if June prints hot
Macro & Inflation
On the Mar print, 12m-avg held 8.6% — lowest since Mar 2023; credit 6.03%.
CPI Trend
CPI 12m-avg held 8.6% on the Mar print — food 8.24%, non-food 9.09% — the disinflation read stalled.
12m-avg at lowest since Mar 2023 (8.4% then), but non-food at 9.09% keeps the average from falling.
MPC: disinflation stalled — yet the auction front-end eased again (91d 9.85%), and credit at 6.03% says capital, not the policy rate, binds demand.
WATCH
- ◆June CPI for the budget's VAT/tariff pass-through
- ◆Non-food above 9% (9.09%) as the stickiness tell
- ◆Import cover at 5.86mo as the taka holds near 123.10
RISK
- ▼Sticky non-food at 9.09% re-steepens the front-end if it persists
- ▼Budget VAT/tariff measures compound the June CPI
- ▼Private credit at 6.03% signals weak demand transmission
Macro is the credit cycle's second leg, and it confirms the diagnosis. On the Mar print, CPI 12m-avg held 8.6% — lowest since Mar 2023 (8.4% then) — but the average won't fall because non-food stayed sticky at 9.09%; food at 8.24% did the disinflating. The real policy rate is thin but positive at 1.29%. The tell is on the other side of the balance sheet: private credit growth is stuck at 6.03% (Feb), near a 60-period low, even as the post-budget curve rallied and M2 ran 10.52%. Money is growing; credit is not — the banks carrying a Tk 10.04tn distressed pile on 1.56% CAR (Capital Adequacy Ratio) cannot lend, not because money is too dear. Capital, not rates, binds demand. The budget's VAT/tariff measures are the upside risk to the June read; until they land, the desk treats disinflation as a plateau and reads weak credit as a solvency signal, not a demand one.
Remittance
Remittance held $3.43bn; cover over the $3.04bn gap stays thin into the dip.
Remittance Inflow
WATCH
- ◆June–July seasonal pattern — pre-Eid inflows now past
- ◆Whether the $3.43bn pace holds into the dip as the gap stays wide
- ◆Whether a kerb premium opens as the market rate nears 123.10
RISK
- ▼Post-Eid seasonal dip typical in Jun–Jul — cover already thin at $0.39bn
- ▼Informal-channel share widens if the market/official spread passes 123.10
Commodities
Gold eased to $4,172.90 as the haven bid cooled; LNG quiet at $15.
WATCH
- ◆LNG spot for Jun–Aug monsoon-demand pricing
- ◆Gold as a global risk-sentiment proxy after easing to $4,172.90
RISK
- ▼LNG spike on monsoon power demand lifts Petrobangla off-take costs
- ▼Gold slide signals risk-on rotation — an emerging-market capital-flow read
Fiscal
Deficit tilts offshore — China funds courted as NBR collection lags at Tk 3.27tn.
NBR Tax Revenue
Monthly NBR revenue run-rate held flat — YTD collection steady at BDT 3.27tn, still trailing the FY26 target as the FY27 lift is pledged.
The BDT 3.27tn YTD level has held flat across the last twelve reads — the pace set, not accelerating.
Treasury/ALCO: a steady run-rate trims the deficit only marginally — enforcement must deliver to ease the Tk 12.34tn-by-FY29 borrowing path.
WATCH
- ◆The first post-budget T-Bill auction — the deficit-financing mix in practice
- ◆Outcome of the China funding ask ($3.0bn) and the Tokyo lending-rate review
- ◆NBR enforcement vs the 10% tax-GDP pledge
RISK
- ▼Execution shortfall pushes borrowing toward Tk 12.34tn by FY29
- ▼Offshore tilt swaps crowding for FX service as the runway thins
- ▼Tax-GDP near the world's lowest caps domestic financing
Iran War & Oil
Brent edges back above $80 to $80.59; the import-bill cushion thins.
Brent Crude
Brent edged back above $80 to $80.59, WTI $76.54 — up from $79.07, still ~$30 under May's $111 peak.
The sub-$80 break has reversed; May's $111 peak now sits ~$30 above spot.
Treasury: the import-bill cushion thins as oil re-crosses $80 — watch the $82 line and the US-Iran deal's durability into the two-month window.
WATCH
- ◆Whether the US-Iran accord holds Brent near $80 past the two-month window
- ◆Oil pass-through into June CPI after the budget's tariff measures
- ◆Import-bill relief against the $3.04bn trade gap and the taka near 123.10
RISK
- ▼A talks collapse re-arms the Tk 42,600cr subsidy tail
- ▼Any bounce lifts the import bill into sticky non-food CPI at 9.09%
- ▼FY27 projections under-provision if oil round-trips
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