Headlines
S&P cuts the outlook on banking and fiscal risk; equities reclaim the floor.
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 7-day eased to 9.89%, back under policy; reserves still 1 May.
FX Reserves
WATCH
- ◆The next FY27 bill auction cost — the front just cleared 40-52bp dearer
- ◆Whether the 7-day stays below policy now the July turn has passed
- ◆The next reserves print to supersede the 1 May $34.55bn read
RISK
- ▼Reserves dated 1 May quoted against a fuel bill and a regas outage into a second industrial week
- ▼Cost-push inflation the 10% policy cannot reach — non-food CPI 9.09% on the March print
- ▼The new auction clearing 40-52bp higher across the bill curve, lifting the FY27 borrowing cost
Banking
S&P turns negative on banking risk; on the Q1 print NPLs hold 32.26%.
WATCH
- ◆Whether Q2 2026 statements land the stayed-loan overhang on BSEC's quarterly clock
- ◆Any Q2 CAR disclosure superseding the Sep 2025 read of 1.56%
- ◆S&P's next action window after the negative outlook
RISK
- ▼The negative outlook lifting sovereign and bank funding costs offshore
- ▼Private credit at 6.03%, a 60-period low, capping the earnings that rebuild capital
- ▼The SCB tail carrying the corporate gap as deposits pile up unlent
S&P confirmed what the tape has been pricing: the sovereign outlook to negative, banking-sector stress named a lead driver. On the Q1 print NPLs hold 32.26% and CAR 1.56% on the September read — 844bp below the 10% floor, a cushion absent rather than thin — and the true impaired stock sits above the printed ratio once the eightfold rise in court-stayed loans is counted. The paradox is liquidity: banks' cash is bloating on rising deposits and slack demand, private credit growth at a 60-period low of 6.03%, yet none of it recapitalises the book. Money without borrowers rebuilds no capital. A negative outlook now raises the funding cost of the very institutions least able to bear it. The dispersion stays the trade — own the private compounders, avoid the SCB tail.
FX & External
USD/BDT held 122.85 a tenth session; cushion holds as Brent falls to $87.76.
External Flow Balance
Trade gap held $1.77bn — exports $4.03bn against $2.82bn remittance — leaving $1.05bn of monthly cover as Brent eased to $87.76.
Peg unmoved a tenth session since the 122.85 fix; crude now $87.76, off the $100 it touched last week.
Treasury: hedge energy lines while crude is off $90 — a spot-LNG month is one fuel-heavy import from turning the $1.05bn cover negative.
WATCH
- ◆Whether Brent holds below $90 — it eased to $87.76 — or the Gulf premium rebuilds
- ◆The Panda-bond feasibility panel — a funding-diversification hedge for the reserve build
- ◆How much of the $1.05bn cushion the next trade print gives up to a spot-LNG month
RISK
- ▼S&P's negative outlook lifting the cost of the offshore borrowing the reserve build depends on
- ▼A spot-LNG month turning the $1.05bn cushion negative even with crude off $90
- ▼A $63.4bn export target needing 15% growth off a base flagged unlikely to rebound
DSE Markets
DSEX reclaimed 5,804 to 5,839.77 — a broad bounce the day S&P turned negative.
DSEX Index
DSEX rose 0.96% to 5,839.77 — reclaiming the 9 Jul floor of 5,804 — with 299 advancers to 53 on Tk872cr turnover.
Ten prints from the 9 Jul reopen floor of 5,804 — a 5,926 high on 20 Jul, broken yesterday, reclaimed today.
Equity desk: a broad reclaim off the floor, but on moderate volume and into an S&P downgrade — relief, not a trend; watch 5,804 as support.
WATCH
- ◆Whether 5,839 holds the reclaim or the 5,804 break level caps the next rally
- ◆Turnover — Tk872cr confirms the bounce but is not a trend
- ◆Bank scrip against S&P's negative outlook and Q2 disclosure
RISK
- ▼The reclaim fading if S&P's negative outlook reprices the bank-heavy float
- ▼A one-day breadth flip mistaken for a trend — no volume expansion yet
- ▼The credit overhang — NPLs 32.26%, CAR 1.56% — unchanged by a technical bounce
The floor the market broke yesterday, it reclaimed today. DSEX closed 5,839.77 — up 0.96% and back above the 9 Jul reopen floor of 5,804 it had breached to 5,784.37 the session before — completing a round-trip that ran from a 5,926 high on 20 Jul down through the base and back. This time the tape was broad: 299 advancers to 53, 5.6-to-1 positive against the narrow bank-led break, on Tk872cr — firmer than the Tk781cr break day but still no volume surge. The reclaim reads as a relief bounce off an oversold floor, not a trend change, and it landed on an awkward day: S&P cut the sovereign outlook to negative citing banking-sector stress, the ratings market marking the same credit cycle — NPLs 32.26%, CAR 1.56%, 844bp below floor — that drags the heavyweight bank names. Fade rallies in the SCB scrip; the private compounders led the bounce and stay the trade.
T-Bonds & T-Bills
The bill curve jumped 40-52bp and dis-inverted; the 10y steady at 10.24%.
BD Govt Yield Ladder
The bill curve jumped at the latest auction — 364d +52bp to 10.09%, 91d +49bp to 9.79%, 182d to 9.99% — the front inversion cleared.
The 364d held 9.57% for the prior window — its jump to 10.09% is the first front-end repricing in weeks.
ALCO: the front repriced 40-52bp dearer and dis-inverted — extend duration selectively; funding term now costs more than a month ago.
WATCH
- ◆Whether the next auction holds the new 10.09% 364d or extends the repricing
- ◆The 10y at 10.24% — whether duration supply cheapens it toward the 10.34% recent high
- ◆5s10s at 56bp — the slope that reprices any long-dated fixed-rate book
RISK
- ▼Duration marks if the 10y cheapens toward 10.34% to match the bill repricing
- ▼The FY27 borrowing programme clearing 40-52bp dearer than a month ago
- ▼Higher front funding costs unwinding carry across the book
Macro & Inflation
On the March prints credit held 6.03%; the money exists, borrowers don't.
CPI Trend
CPI 12m-avg held 8.6% on the March print — food 8.24%, non-food 9.09% — disinflation has flattened rather than resumed.
The 12m-avg is lowest since Mar 2023 (8.4% then), with food lowest since Dec 2025 (7.7% then).
MPC: with the real policy rate at 1.29% and credit at 6.03%, the next MPS holds — a cut cannot reach cost-push inflation.
WATCH
- ◆The next CPI print — the first to carry the recent oil spike into a non-food line already at 9.09%
- ◆Private credit at 6.03% — whether the next print breaks the 60-period low
- ◆Import cover 5.86mo on the March read — lowest since Feb 2026 (5.3 then)
RISK
- ▼Real policy rate at 1.29% — lowest since Feb 2026 (0.9% then) — little room before it turns negative
- ▼Private credit at 6.03%, a 60-period low, as public capex contracts alongside
- ▼REER at 102.78 keeping the taka dear while exports face a 15% growth test
Remittance
Remittance held $2.82bn; cover stays $1.05bn as Brent eases to $87.76.
Remittance Inflow
WATCH
- ◆The next monthly print — whether $2.82bn is a floor or the top of a slide
- ◆How much of the $1.05bn cushion the next trade print gives up to a spot-LNG month
- ◆S&P's negative outlook against the offshore funding the reserve build leans on
RISK
- ▼A single spot-LNG-heavy import month turning the $1.05bn cover negative even with Brent off $90
- ▼The line flat across the window — not growing while the bill it funds moves
- ▼A 15% FY27 export-growth target denting the receipts that share the account
Commodities
Gold eased to $4,075 as crude fell; the regas outage lifts LNG risk.
WATCH
- ◆LNG spot against the 20 Apr $15/MMBtu print — a regas outage now hitting industry
- ◆Whether gold's bid extends or fades if the Gulf premium rebuilds
- ◆Food and energy import lines bidding for the same $1.05bn monthly cushion
RISK
- ▼A terminal-driven spot LNG print landing well above $15/MMBtu into the monsoon 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 March print
Fiscal
S&P names fiscal risk; NBR stuck at Tk3.61tn, Panda bonds under study.
NBR Tax Revenue
Monthly NBR collection printed flat again, holding the YTD line at Tk3.61tn — no new receipt has landed across the fourteen-print window.
Fourteen prints, all Tk3.61tn — the last new monthly figure predates the window; S&P now cites the fiscal risk.
Treasury: with revenue frozen and S&P negative, FY27 funding cost rises against a flat receipt line — watch the next NBR print.
WATCH
- ◆The next monthly NBR print — the Tk3.61tn line has not moved across the window
- ◆The Panda-bond feasibility panel — foreign-currency sovereign funding under study
- ◆S&P's next action window after the negative fiscal-risk outlook
RISK
- ▼The negative outlook lifting the cost of the FY27 domestic and offshore borrowing programme
- ▼A corporate-tax take half the peer rate — the base is thin, not just flat
- ▼Development spending contracting alongside private credit at a 60-period low
S&P put the sovereign on negative outlook citing fiscal risk beside the banking sector — external confirmation of a receipt base that cannot keep pace. NBR collection holds flat at Tk3.61tn across the window, no new monthly print landing, while the FY27 VAT target leans on a four-pillar plan that is aspiration until a figure moves the line. The base is structurally thin: corporate tax runs half the peer rate, and development spending has itself dipped to a worrying level, so both public capex and private credit — at a 60-period low of 6.03% — are contracting together. Against that, a high-level panel now studies Panda and other foreign-currency sovereign bonds to widen the funding base. But a negative outlook raises the price of every option: a thin, flat receipt line borrowing dearer to cover a widening gap. Watch the next NBR print.
Iran War & Oil
Brent eased to $87.76, off $100 but $7.76 above the $80 FY27 line.
Brent Crude
Brent eased to $87.76 and WTI to $82.11 — last week's break above $100 has fully unwound, the spread now $5.65.
Brent now prints $7.76 above the $80 FY27 line, back below the $100 it touched last week.
Treasury: crude relief is real, but the regas outage shifts energy risk to spot cargo — the import bill stays $7.76 above budget.
WATCH
- ◆Whether $88 holds or the Gulf premium rebuilds on renewed escalation
- ◆The regas outage — spot LNG into monsoon, now hitting pharma API and industry
- ◆The FY27 subsidy provision against a spot price still $7.76 above its $80 assumption
RISK
- ▼The premium rebuilding onto the same $1.05bn monthly cushion
- ▼A terminal-driven spot LNG spike offsetting the relief from crude easing
- ▼Pass-through into a non-food CPI line at 9.09% on the March print
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