Headlines
Industrial output contracts; Q3 GDP 2.22%; a state bank's UAE licence wobbles.
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)
The 14-day drops 205bp to 9.93%; the 7-day at 10.05% now leads the curve.
FX Reserves
WATCH
- ◆Whether the 7-day at 10.05% follows the 14-day back down at the next fix, or the pinch settles at one week
- ◆Which banks the capital-based operating restrictions bind, and whether their bid leaves the market or moves to the SLF window
- ◆The next FY27 T-bill auction against a 91d that has now held 9.17% for a seventh print
RISK
- ▼A 7-day above the 10% policy rate repricing one-week funding for short-funded ALM (Asset-Liability Management) books
- ▼Overnight at 9.67% leaving 183bp of headroom to the 11.50% SLF ceiling if the term bid returns
- ▼A buffer dated 1 May being quoted against a Brent price set on 21 Jul — the cover number is older than the shock
Banking
Janata's UAE branches at risk on a Tk1,000cr capital hole.
WATCH
- ◆Whether the UAE regulator grants a recapitalisation window or moves straight to closure
- ◆Whether other jurisdictions re-test the SCB (State-Owned Commercial Bank) group's capital on the same evidence
- ◆Any Q2 2026 CAR disclosure that supersedes the Sep 2025 read
RISK
- ▼Loss of the UAE branch network cutting formal channel capacity into a $2.82bn monthly remittance line
- ▼Recapitalisation still unfunded with the ratio 844bp below the floor on the Sep 2025 read
- ▼Industrial output contracting for the first time in six years, seeding the next NPL cohort
A capital ratio becomes real when someone else prices it. For four years the sector's 1.56% CAR — 844bp below the floor on the Sep 2025 read — has been a domestic disclosure, absorbed by forbearance and a supervisor unwilling to force the question. A foreign regulator carries no such incentive: Janata's UAE branches face closure over a Tk1,000cr deficit, and the precedent is Sonali's UK licence, gone four years ago on the same arithmetic. The cost is not the branch, it is the channel. Those counters sit on a $2.82bn monthly remittance line, and formal capacity lost in the Gulf reappears as informal flow BB cannot count. The domestic tape argues the same direction — industrial output has contracted for the first time in six years, which is next year's NPL cohort forming now. Nothing re-rates the state bank book but fresh capital, and none is funded.
FX & External
USD/BDT holds 122.85 as Brent clears $90 into a $1.05bn cushion.
External Flow Balance
Trade gap holds $1.77bn — exports $4.03bn against remittance $2.82bn, leaving $1.05bn of cover as the fuel bill runs 85% higher.
Remittance has held $2.82bn for eleven straight prints since the post-Eid step-down from $3.43bn.
Treasury: with Brent at $90.96 the cushion is the runway — hedge energy-linked exposure before the next trade print absorbs it.
WATCH
- ◆Whether BB defends 122.85 through the Q4 import cycle or lets the mid drift as it did through Q1
- ◆The next trade print — how much of the $1.05bn cushion the 85% fuel line absorbs
- ◆The $335m Chinese facility signing date, the tranche that keeps the buffer flat rather than falling
RISK
- ▼Brent at $90.96 and a reopening rice import line bidding for the same dollars while exports hold flat at $4.03bn
- ▼Import cover 5.86mo on the Mar read — lowest since Feb 2026 (5.3 then) — thinning as the fuel line lands
- ▼Industrial output contracting for the first time in six years, weakening the receipt side of the runway at source
Two numbers moved today and neither was the exchange rate. Brent cleared $90.96 — $10.96 above the $80 line FY27's subsidy and import math were written against — and Q3 FY26 growth printed 2.22%, with industrial output contracting for the first time in six years. The outflow side is re-pricing on a war premium while the inflow side is losing the capacity to earn. Exports held $4.03bn and remittance $2.82bn, so the $1.05bn cushion over the $1.77bn gap survives another print — but it is now the shock absorber for a fuel bill up 85%, a rice line reopening on flood damage, and a $34.55bn reserve stock that holds only because it keeps being borrowed. Price FX-linked exposure off that cushion, not off the peg. Energy importers need hedges, not headroom; EU-facing exporters need shorter tenor, not better pricing.
DSE Markets
DSEX sheds 0.76% to 5,855.72; 245 fall against 98 advancing.
DSEX Index
DSEX closed 5,855.72, down 0.76% — 245 stocks fell against 98 advancing on Tk1,070cr, a second straight decline.
The run since the 9 Jul reopen reads 5,804 → 5,849 → 5,911 → 5,926 → 5,900 → 5,855: the 5,926 high is two prints back.
Equity desk: breadth led price down twice — treat the 9 Jul reopen at 5,804 as the level that defines the run.
WATCH
- ◆Whether 5,804 — the 9 Jul reopen level — holds, or the entire reopen run retraces
- ◆Insurance scrip, leading the decliners, against a bank float now carrying capital-based operating curbs
- ◆Whether eased margin-loan rules lift turnover off Tk1,070cr or merely lift leverage
RISK
- ▼Two consecutive falls on thinning turnover — distribution, not consolidation
- ▼Bank-heavy float exposed to a 32.26% NPL pile and a state bank's overseas licence problem
- ▼Looser margin rules adding leverage into a tape printing 245 decliners
T-Bonds & T-Bills
The 10y gives back 10bp; the curve flattens to 56bp.
BD Govt Yield Ladder
The 10y returned to 10.24% from 10.34% while the 5y held 9.68% — 5s10s narrows 10bp to 56bp; bills flat.
The 10y is back to 10.24%, the level it held for ten prints before the three-print 10.34% excursion — the backup did not stick.
ALCO: the bear-steepening has reversed, not merely stalled — add duration only if the next FY27 auction confirms the flatter curve.
WATCH
- ◆The next FY27 auction — whether 91d clears inside 9.17% after seven flat prints, or the front end backs up
- ◆Whether 10.24% holds or the 10.34% excursion repeats as FY27 supply builds
- ◆The 7-day call at 10.05% against a 364d bill at 9.57% — funding above the asset yield at one week
RISK
- ▼A long-end backup re-steepening 5s10s and marking down duration books
- ▼FY27 gross supply staying onshore if the $335m offshore tranche slips
- ▼Bills anchored at 9.17% while one-week funding prints 10.05% — negative carry on the front book
Macro & Inflation
On the Mar prints 12m-avg CPI held 8.6%; credit at 6.03%.
CPI Trend
CPI 12m-avg held 8.6% on the Mar print — food 8.24%, non-food 9.09% — the disinflation trend has flattened, not resumed.
The 12m-avg is lowest since Mar 2023 (8.4% then), yet non-food at 9.09% keeps it from falling further.
MPC: with Brent at $90.96 and growth at 2.22%, the next MPS faces a cost shock and a demand hole at once.
WATCH
- ◆The next CPI print for Brent at $90.96 feeding a non-food line already at 9.09%
- ◆Private credit at 6.03% against contracting industrial output — demand, not supply, is the binding side
- ◆Rice prices on flood damage against a food line that printed 8.24% in March
RISK
- ▼Both CPI baskets facing fresh cost pressure before the 12m-avg clears 8%
- ▼Import cover 5.86mo — lowest since Feb 2026 (5.3 then) — as the fuel bill lands
- ▼M2 at 10.52% against 6.03% credit growth — money accumulating where it cannot be lent
The inflation prints are three months old; the growth prints are not, and they change how to read them. Q3 growth at 2.22%, with industrial output contracting for the first time in six years, explains the number that has looked anomalous all quarter — private credit at 6.03%, a 60-period low, against M2 at 10.52%. That is not a supply constraint. Banks have the money; borrowers have stopped asking, and an economy growing 2.22% does not draw working capital. The uncomfortable part is the policy trade-off it creates. A 12m-avg CPI of 8.6% — lowest since Mar 2023 (8.4% then) — with non-food at 9.09% argues against easing, a contracting industrial base argues for it, and Brent at $90.96 worsens the cost side without touching demand. Assume the 10% policy rate holds and price credit off demand, not off the rate.
Remittance
Remittance holds $2.82bn for an eleventh print; cover stays $1.05bn.
Remittance Inflow
WATCH
- ◆The next monthly print — whether $2.82bn is the post-Eid base or the start of a slide
- ◆Janata's UAE branch network as formal channel capacity into the Gulf corridor
- ◆How much of the $1.05bn cushion the next trade print gives up to fuel
RISK
- ▼Gulf channel capacity lost to branch closures re-routing flow informal, outside BB's count
- ▼An eleventh flat print — the line is not growing while the import bill is
- ▼A single fuel-heavy month turning the $1.05bn cover negative
Commodities
Gold breaks $4,000 to $3,999.70; LNG still stale at $15.
WATCH
- ◆Whether gold holds under $4,000 or the safe-haven bid returns on the next escalation
- ◆LNG spot against a 20 Apr $15/MMBtu print — three months stale into the monsoon load
- ◆Rice import tenders on flood damage — the second hard-currency food line after fuel
RISK
- ▼An LNG spike landing on top of $90.96 Brent in the same import month
- ▼Food and energy import lines bidding for the same $1.05bn monthly cushion
- ▼Pass-through into a non-food CPI line at 9.09% on the Mar print
Fiscal
NBR run-rate holds Tk3.61tn while the taxable base contracts.
NBR Tax Revenue
Monthly NBR collection has printed flat all window at the Tk3.61tn YTD level, lifted once off the earlier Tk3.27tn plateau.
Fourteen consecutive prints at Tk3.61tn — no new monthly collection has landed since the step off Tk3.27tn.
Treasury/ALCO: with Brent at $90.96 the FY27 risk sits on the subsidy line, not the revenue line — watch the next NBR print.
WATCH
- ◆Whether the fuel-subsidy line is revised in-year with Brent at $90.96 against the $80 budget assumption
- ◆The next monthly NBR print — the Tk3.61tn level has not moved all window
- ◆Whether the $335m Chinese facility signs and keeps FY27 borrowing off the domestic bank book
RISK
- ▼A subsidy provision written at $80 Brent meeting a spot price $10.96 higher
- ▼Q3 growth at 2.22% eroding the base under a materially higher FY27 revenue target
- ▼Annuity spending disbursed without verified recipients — leakage on the expenditure side
Iran War & Oil
Brent adds $2.86 to $90.96; WTI follows to $84.06.
Brent Crude
Brent extended $2.86 to $90.96 and WTI $1.57 to $84.06 — the war premium is widening, not decaying.
Brent now sits $10.96 above the $80 line underwriting FY27's oil math, and $6.07 above the early-July $84.89 low.
Treasury: the last print produced an 85% fuel bill at $88 — provision energy lines and re-test FY27 subsidy assumptions now.
WATCH
- ◆Whether $90.96 holds through the week or fades as it did to $84.89 in early July
- ◆Energy-import LC volumes at the one-week funding point, where call money now reads 10.05%
- ◆The FY27 subsidy provision against a spot price $10.96 above its $80 assumption
RISK
- ▼A second fuel-bill step-up landing on a $1.05bn monthly cushion already absorbing the first
- ▼Oil pass-through into a non-food CPI line at 9.09% on the Mar print
- ▼Energy-importer receivables stretching as the pass-through hits margins, not just the import bill
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