Headlines
Cut done; the fear pivots to inflation and still-thin bank capital.
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 at 9.5% post-cut; the 14-day call at 10.38% hasn't followed.
FX Reserves
WATCH
- ◆The August bill auction — whether the front follows the 50bp cut or holds the 40-52bp July repricing
- ◆The next reserves print to supersede the stale 1 May $34.55bn read
- ◆Whether the 14-day call above 10% breaks lower once the month-end turn clears
RISK
- ▼BB easing into a tightening interbank market — pressure on the 122.85 peg and thin reserves
- ▼The cut compressing the real policy rate below 1% into a 9.09% non-food CPI line
- ▼A cheaper policy anchor not yet reaching term funding costs into early August
BB took the policy rate 50bp to 9.5% on 31 Jul — the first move off the 10% level held since the April MPS — and the signal outweighs the increment. It eases into an interbank market pulling the other way: the 14-day call sat at 10.38% into month-end, above even the old policy, while the front bill curve holds its 40-52bp July repricing. So the anchor has moved but the funding cost has not. Set against 9.09% non-food inflation and a peg pinned at 122.85 on reserves still dated 1 May, read the cut as a growth call — development spending at a 53-year low, private credit at a 60-period 6.03% — not a disinflation dividend. Today the FE frames the second-order risk directly: a cut feared to fuel inflation. For the desk, the real policy rate — now below 1% — is the pressure point on the taka; keep term funding hedged into the August auction.
Banking
Resolution advancing; the Q1 book unmoved — NPL 32.26%, CAR 1.56%.
WATCH
- ◆Whether Q2 2026 statements land the court-stayed loan overhang on BSEC's quarterly clock
- ◆Any Q2 CAR disclosure superseding the Sep 2025 1.56% read
- ◆Whether the 50bp cut reaches SCB funding costs or only the private book
RISK
- ▼The court-stayed loan stock understating the printed 32.26% NPL ratio
- ▼Foreign banks' 11% 2025 lending pullback thinning cross-border credit
- ▼The Aug 15 UAE capital deadline — an offshore call on thin balance sheets
The banking book stood still while the machinery around it moved. Resolution keeps advancing — the merger programme running, depositor caps holding confidence — but the numbers have not followed: NPLs hold 32.26% on the Q1 print and system CAR reads 1.56% on the September figure, 844bp below the 10% floor, a cushion absent, not thin. An Aug 15 deadline to recapitalise a UAE operation shows the offshore capital calls landing at the wrong moment, while foreign banks' 11% 2025 lending pullback thins the cross-border credit the weakest sheets can least replace. Friday's 50bp cut lowers the funding cost of the repair, but it reaches the private compounders long before the SCB tail. Dispersion is the trade — own the compounders, fade the SCB scrip.
FX & External
USD/BDT held 122.85; cover +$1.05bn as the cut widens the carry gap.
External Flow Balance
Trade gap held $1.77bn — exports $4.03bn, remittance $2.82bn — leaving $1.05bn of monthly cover as the peg stayed pinned at 122.85.
USD/BDT unchanged at 122.85 for a thirteenth print; reserves still dated 1 May's $34.55bn.
Treasury: the 50bp cut widens the carry gap defending the peg — hedge FX while the $1.05bn cover is still positive.
WATCH
- ◆Whether 122.85 holds now that BB has eased into a pegged, thin-reserve setup
- ◆The next reserves print superseding the stale 1 May $34.55bn read
- ◆A spot-LNG-heavy import month as the FSRU outage bids up cargo cost
RISK
- ▼The 50bp cut widening the carry gap that pressures the peg and reserves
- ▼A spot-LNG month turning the $1.05bn cover negative while the FSRU stays down
- ▼Reserves read still dated 1 May — the true buffer unverified against a rising fuel bill
DSE Markets
DSEX closed 5,878.85 Thursday; Friday's cut sets up Sunday's reopen.
DSEX Index
DSEX round-tripped the week — the 5,900 line broken to 5,784, retaken, then eased to 5,878.85 at Thursday's close.
Ten sessions bracketed by a 5,784 low and 5,900 — Thursday's 5,878.85 sits mid-range.
Equity desk: Friday's 50bp cut is a fresh tailwind for the bank-heavy float — watch whether 5,900 turns to support on Sunday's reopen.
WATCH
- ◆Whether the 50bp cut lifts the bank-heavy float on Sunday's reopen
- ◆Whether 5,900 caps the index again or turns to support after the round-trip
- ◆Reopen turnover — whether the volume that confirmed the reclaim persists
RISK
- ▼A rate-cut pop mistaken for a credit-cycle repair — NPLs still 32.26%
- ▼The FSRU/LNG outage pressuring export-sector earnings under the index
- ▼The Aug 15 offshore bank-capital call repricing the bank-heavy float
T-Bonds & T-Bills
Bill curve held its July repricing — 364d 10.09%; 10y steady 10.24%.
BD Govt Yield Ladder
The repriced bill curve held all week — 364d 10.09%, 182d 9.99%, 91d 9.79% — the front inversion cleared and steady.
The 364d held 9.57% through ten prints before its 52bp jump to 10.09% four auctions ago — steady since.
ALCO: the front sits 40-52bp dearer than a month ago; watch whether the next auction follows Friday's 50bp cut lower.
WATCH
- ◆Whether the next auction follows the 50bp cut lower or holds the 10.09% 364d level
- ◆The 10y at 10.24% — whether duration supply cheapens it toward the 10.34% recent high
- ◆5s10s at 56bp — the slope repricing any long-dated fixed-rate book
RISK
- ▼The cut and the front's July repricing pulling term rates in opposite directions
- ▼Duration marks if the 10y cheapens toward 10.34% to match the bill repricing
- ▼The FY27 borrowing programme still clearing 40-52bp dearer than a month ago
Macro & Inflation
On the Feb print credit held 6.03% — a 60-period low — as BB eased.
CPI Trend
CPI 12m-avg held 8.6% on the March print — food 8.24%, non-food 9.09% — disinflation has flattened, not resumed.
The 12m-avg is lowest since Mar 2023 (8.4% then), with food lowest since Dec 2025 (7.7% then).
MPC: BB cut 50bp anyway — but with non-food at 9.09%, the cut can't reach cost-push inflation; watch the next CPI print.
WATCH
- ◆The next CPI print — the first to carry July's oil into the 9.09% non-food line
- ◆Private credit at 6.03% — whether the next print breaks the 60-period low after the cut
- ◆Import cover 5.86mo on the March read — lowest since Feb 2026 (5.3 then)
RISK
- ▼The 50bp cut compressing the real policy rate below 1% from 1.29% on the March print
- ▼Private credit at a 60-period low as development spending hits a 53-year low
- ▼REER at 102.78 keeping the taka dear while exports face a 15% FY27 growth test
Remittance
Remittance held $2.82bn; cover stays $1.05bn over the trade gap.
Remittance Inflow
WATCH
- ◆The next monthly print — whether $2.82bn is a floor or the top of a slide
- ◆BB's new PayPal, Payoneer-style rails — a structural add to the inflow channel
- ◆How much of the $1.05bn cushion a spot-LNG month gives up as the FSRU stays down
RISK
- ▼A spot-LNG-heavy import month turning the $1.05bn cover negative
- ▼The 50bp cut widening the carry gap the remittance cushion must defend
- ▼The line flat across the window — not growing while the bill it funds moves
Commodities
Gold jumped ~$150 to $4,168.30; the FSRU outage lifts LNG risk.
WATCH
- ◆LNG spot against the stale 20 Apr $15/MMBtu print — the FSRU outage now hitting cargoes
- ◆Whether gold's ~$150 weekly 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 well above $15/MMBtu into the monsoon month
- ▼Gold's safe-haven bid signalling risk-off into a thin-reserve FX setup
- ▼Pass-through into a 9.09% non-food CPI line on the March print
Fiscal
NBR held Tk3.61tn; development spending at a 53-year low, ADP 67.52%.
NBR Tax Revenue
Monthly NBR collection printed flat again, holding the YTD line at Tk3.61tn — no new receipt across the fourteen-print window.
Fourteen prints, all Tk3.61tn — the last new monthly figure predates the window as capex hits a 53-year low.
Treasury: revenue frozen while BB cuts — FY27 funding costs rise against a flat receipt line; watch the next print.
WATCH
- ◆The next monthly NBR print — the Tk3.61tn line hasn't moved across the window
- ◆FY26 ADP at a record-low 67.52% — whether the political transition keeps dragging execution
- ◆Govt bank borrowing beyond the 30 Jun Tk0.94tn as the FY27 programme opens
RISK
- ▼A corporate-tax take half the peer rate — the base is thin, not just flat
- ▼Development spending contracting into a private-credit 60-period low
- ▼The FY27 borrowing programme clearing dearer as revenue stays frozen
Iran War & Oil
Brent at $89.45 — off the $100 break but $9.45 above the $80 line.
Brent Crude
Brent ticked to $89.45 and WTI to $84.05 — off last week's $100 break but holding above the week's $87 low.
Brent now prints $9.45 above the $80 FY27 line, having round-tripped from the $100 it touched last week.
Treasury: crude relief partial, but the FSRU shutdown shifts energy risk to spot cargo — the import bill stays $9.45 above budget.
WATCH
- ◆Whether Brent holds near $89 or the Gulf premium rebuilds on renewed escalation
- ◆The FSRU shutdown — two spot-LNG cargoes disrupted, now into the monsoon month
- ◆The FY27 subsidy provision against a spot price still $9.45 above its $80 assumption
RISK
- ▼The FSRU outage forcing costlier spot LNG onto the $1.05bn monthly cushion
- ▼Brent above $89 pass-through into a 9.09% non-food CPI line
- ▼A spot-LNG spike offsetting the crude relief on the import bill
Every morning.
Free.