Headlines
Apparel share bleeds to rivals; Fitch trims the FY27 growth path.
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 holds 10%; the 14-day call spiked to 11.98% above the corridor.
FX Reserves
WATCH
- ◆Whether the 14-day's 11.98% spike holds or normalises back inside the 11.50% SLF ceiling next week
- ◆June CPI for the 15% VAT pass-through into the FY27 MPS stance
- ◆The next FY27 T-bill auction against a 5y holding its 9.68% rally
RISK
- ▼A term-funding squeeze at the 14-day repricing short-funded ALM (Asset-Liability Management) books
- ▼Reserve build loan-funded — net thinner than the $34.55bn 1 May gross
- ▼Offshore financing tilt loading external-debt service atop the rate stack
Banking
On the Q1 print the 32.26% NPL sits atop a 1.56% CAR.
WATCH
- ◆The IMF bad-loan review's write-off-versus-recovery condition against the reform timeline
- ◆Whether the FY27 offshore-financing tilt raises the cost of the state-bank backstop
- ◆Al-Arafah handback terms — recapitalisation by former owners or tail migration back
RISK
- ▼CAR 844bp below the 10% floor — the solvency hole unmoved on the Sep 2025 read
- ▼Forbearance widening across banks and NBFIs deferring recognition system-wide
- ▼An offshore-financed FY27 budget raising the cost of the state-bank backstop
Banking is the system's structural bind, and nothing in this week's tape moved it. On the Q1 2026 read NPLs hold 32.26% atop a 1.56% CAR from Sep 2025 — 844bp below the 10% floor, a solvency hole carried by write-offs rather than cures. The policy direction remains forbearance over repair: one-time exits already extended to bank and NBFI borrowers defer recognition rather than deliver it, while the IMF bad-loan review and the audit of the merged banks still await resolution accounting. The room to recapitalise narrows precisely as it is needed most — FY27 financing tilts offshore, and Fitch has now joined the IMF in trimming the growth path, loading hard-currency debt service onto the budget that must also carry the state-bank backstop. The trade is unchanged: only fresh capital re-rates the book. The book stays defensive until the recap lands.
FX & External
USD/BDT pinned at 122.85; flows clear, but EU apparel share bleeds.
External Flow Balance
Trade gap held $1.77bn with exports $4.03bn and remittance $2.82bn — flows still clear the gap, cover positive at $1.05bn.
Remittance has held $2.82bn since the post-Eid step-down from $3.43bn — a third month clearing the $1.77bn gap.
Treasury: flows clear today, but watch the EU apparel share loss and the offshore-financed build reprice the runway as receipts thin.
WATCH
- ◆Whether BB holds the 122.85 mid as export receipts thin
- ◆Q4 EU apparel order book — share loss versus Vietnam and rivals
- ◆IMF disbursement pace against reserves still rented at $34.55bn
RISK
- ▼Export erosion — EU share loss and halved Benapole trade thinning the surplus that clears the gap
- ▼Reserve build rented — net thinner than $34.55bn gross, financed offshore
- ▼Any Brent reversal above $85 re-arming the import bill
FX is the hero because the peg's stability is now the least interesting thing about it. USD/BDT held 122.85 and the flow math still works — remittance $2.82bn covering a $1.77bn trade gap, a positive $1.05bn — but that arithmetic rests on an export line cracking structurally. Bangladesh is shedding EU apparel share faster than rivals, Benapole land-trade has halved on the India curbs, and Fitch has joined the IMF in trimming the FY27 growth path. The buffer that would absorb a shock stays rented at $34.55bn, import cover thinned to 5.86mo, and the build is financed offshore. Oil easing to $84.89 buys marginal relief on the import bill. The desk read: the peg is not the risk; the receipts that defend it are — guard cover, trim export-linked credit until the order book stabilises.
DSE Markets
Weekend close — DSEX holds Thursday's post-reopen high of 5,926.
DSEX Index
DSEX closed Thursday at 5,926.28, up ~2.1% from the 9 Jul reopen (5,804); Friday and Saturday are non-trading — the mark holds into next week.
Sixth print off the 9 Jul reopen — 5,804 → 5,849 → 5,911 → 5,926, a fresh high on the reopen run.
Equity desk: 5,926 is the mark into the reopen — watch whether depth and breadth confirm the high or fade it.
WATCH
- ◆Whether 5,926 holds on next week's reopen or thinning depth drags it
- ◆Turnover reclaiming Tk1,600cr — it had slipped below on Thursday
- ◆Concentration — large-caps carrying the index to the high
RISK
- ▼Bank-heavy index exposed to the 32.26% NPL pile and 1.56% sector CAR
- ▼A narrow-leadership high vulnerable to a single large-cap reversal
- ▼Governance noise — Al-Arafah handback and NBFI forbearance
T-Bonds & T-Bills
The 10y backed up to 10.34%; the 5y holds its 9.68% rally.
BD Govt Yield Ladder
The 10y backed up to 10.34% while the 5y held 9.68% — 5s10s steepened to 66bp; T-bills flat (91d 9.17%, 364d 9.57%).
The 5y held 10.37% for 12 straight prints before dropping to 9.68% last week; the 10y now cheapens off 10.24%.
ALCO: bear-steepening from the long end — mark the belly gain but treat the 5y as provisional until the next FY27 auction.
WATCH
- ◆Whether the 10y's backup to 10.34% extends or the next FY27 auction caps it
- ◆June CPI — non-food at 9.09% the risk to the front-end bid
- ◆Whether offshore corporate financing lightens onshore FY27 gross supply
RISK
- ▼A long-end backup steepening the 5s10s and marking down duration books
- ▼FY27 deficit math re-steepening the curve if borrowing stays onshore
- ▼The 5y's lone 9.68% print reversing if the next auction re-steepens the belly
Rates told two stories this week, and they diverged at the long end. The 5y govt bond held the 9.68% level it rallied to — 69bp below its months-long 10.37% perch — but the 10y backed up 10bp to 10.34%, steepening the 5s10s to 66bp. T-bill cut-offs held across the run: 91d 9.17%, 182d 9.40%, 364d 9.57%. So the front and belly are anchored while the long end cheapens — a bear-steepening driven by duration supply concerns, not a policy shift, with BB still at 10%. The read for ALCO: the belly rally that flattened the curve last week is holding, but the 10y is signalling that FY27 gross issuance still commands a term premium. Mark the belly gain, but the long end is the risk — treat the 5y's 9.68% as provisional until the next FY27 auction confirms the front and the long end finds a clearing level.
Macro & Inflation
On the Mar prints 12m-avg CPI held 8.6%; credit binds at 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 its lowest since Mar 2023 (8.4% then), yet non-food at 9.09% keeps the average from falling.
MPC: BB's model sees FY27 CPI over ceiling, keeping policy tight — yet the front-end says capital, not rates, binds demand.
WATCH
- ◆June CPI for the 15% VAT and high-powered-money pass-through
- ◆Non-food above 9% (9.09%) as the stickiness tell
- ◆Private credit at 6.03% against the IMF's 3.5% FY27 growth call
RISK
- ▼The uniform 15% VAT compounding the June CPI print
- ▼Private credit at 6.03% — a 60-period low — signalling dead loan demand
- ▼Import cover at 5.86mo — lowest since Feb 2026 (5.3 then) — as the buffer thins
Remittance
Remittance held $2.82bn; the $1.77bn gap keeps cover positive.
Remittance Inflow
WATCH
- ◆The next monthly print — whether $2.82bn is a dip or the new base
- ◆June–July seasonal pattern — pre-Eid inflows now past
- ◆EU apparel share loss and halved Benapole trade feeding the gap remittance covers
RISK
- ▼Remittance stuck at $2.82bn if the post-Eid softness extends
- ▼Any Brent reversal above $85 re-widening the gap remittance now just covers
- ▼Export erosion eroding the surplus behind cover
Commodities
Gold eased to $3,981 on the week; LNG stale at $15.
WATCH
- ◆Gold as a global risk-sentiment proxy — the bid easing off $4,067
- ◆LNG spot for monsoon-demand pricing off the stale 20 Apr tape
- ◆Whether the safe-haven unwind extends into EM and frontier flows
RISK
- ▼A renewed safe-haven bid in gold pressuring EM flows and the pinned BDT
- ▼LNG spiking on monsoon power demand, lifting Petrobangla off-take costs
- ▼Brent back above $85 lifting the energy-import bill
Fiscal
NBR YTD holds Tk3.61tn; Fitch joins the IMF trimming FY27 growth.
NBR Tax Revenue
Monthly NBR collection holds Tk3.61tn YTD — lifted off the Tk3.27tn plateau as year-end receipts landed, flat every print since.
The Tk3.61tn level has held all window since stepping off the Tk3.27tn plateau — no new monthly print.
Treasury/ALCO: with the int'l-bond plan and the IMF/Fitch FY27 warnings, the funding side is the risk, not the revenue line.
WATCH
- ◆Terms and timing on any int'l-bond issuance — coupon and tenor against the $34.55bn buffer
- ◆Whether the AIIB financing plan shifts the FY27 external-funding mix
- ◆How NBR bridges the FY27 revenue gap behind the offshore financing
RISK
- ▼Fitch and IMF FY27 growth warnings eroding the revenue base under a higher target
- ▼External-debt service rising as FY27 financing tilts offshore — the buffer stays rented
- ▼Bank-borrowing over its revised FY26 ceiling at Tk1.25tn on the 5 Jun print
Iran War & Oil
Brent eased to $84.89; WTI slipped back under $80 — premium softening.
Brent Crude
Brent eased to $84.89 (WTI $79.01, back below $80) — down ~$0.70 from last week's $85.59, the escalation premium softening.
Still a third leg above the $80 line underwriting FY27's pre-war oil math — but off the week's $85.59 high.
Treasury: the retreat trims the import-bill drag as the mid holds 122.85 — but keep energy credit lines provisioned against re-escalation.
WATCH
- ◆Whether Brent holds below $85 or the Iran escalation re-firms the premium
- ◆Oil pass-through into June CPI atop the 15% VAT
- ◆Import-bill drag against the narrower $1.77bn trade gap and the pinned 122.85 mid
RISK
- ▼Any re-escalation re-arming the Hormuz-route supply tail and Brent above $85
- ▼Brent back above $85 re-arming the subsidy and import-bill tail
- ▼FY27 projections under-provisioning if oil re-firms above $85
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