Headlines
Debt outpaces revenue and energy bites, even as BB flags easing inflation.
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)
Front eases inside policy and the 14-day heals to 10.10% this week.
FX Reserves
WATCH
- ◆Whether the 14-day holds inside the SLF ceiling or term tightness returns at month-end
- ◆The overdue July reserve print — the FX buffer behind the easy front still unverified
- ◆Deposit-rate pass-through as the bill-curve drop reaches term funding
RISK
- ▼The front easing into a 33-year-low 4.98% private credit — the cut still not reaching borrowers
- ▼A razor-thin 0.34% real policy rate on the Jun read leaving no carry cushion post-cut
- ▼The reserve print landing weak and repricing the peg behind the easy corridor
The money market's story this week was normalisation. The 14-day call money, bid above the 11.00% SLF ceiling at 11.50% — the corridor's fracture — fell 140bp to 10.10%, back inside the band. The overnight held 9.32% and the 7-day came to 9.24%, both inside the 9.50% policy: the front is cleanly easy two weeks after the 30 July cut. The plumbing has healed — term liquidity is no longer bid above the ceiling, and the corridor is transmitting the cut as designed. But transmission stops at the money market. Private credit sits at a 33-year-low 4.98%, and a razor-thin 0.34% real policy rate on the Jun read leaves the desk no carry cushion. The cut has reached the curve and the corridor; it has not reached the borrower. Watch the July reserve print, still overdue — the buffer behind an easy front no one has verified since the 31 Jul print.
Banking
The book stayed frozen all week — NPL 32.26%, CAR 844bp under the floor.
WATCH
- ◆Q2 2026 NPL disclosure finally landing the court-stayed loan overhang
- ◆Whether the Bank Resolution Act accelerates SCB recapitalisation or forbearance
- ◆Private credit at 4.98% — whether the 30 July cut revives borrowing
RISK
- ▼Private credit at a 33-year-low 4.98% — weak sheets cannot out-grow their NPL stock
- ▼Court-stayed loan stock understating the printed 32.26% NPL ratio
- ▼SCB recapitalisation crystallising under the new resolution regime
The banking book stayed frozen through all five sessions, and the freeze is the story. NPLs sit at 32.26% on the Q1 2026 read, system CAR at 1.56% on the Q3 2025 read — 844bp below the 10% floor, a cushion gone, not thin. Neither moved this week, and neither will until Q2 disclosure lands the court-stayed loan overhang that already understates the printed ratio. What moved was the frame: BB flagged debt outpacing revenue, and the resolution machinery keeps hardening — the Bank Resolution (Amendment) Act now in statute. But the transmission problem is unchanged: the 30 July cut reached the money market and the bond belly this week, not the borrower. Private credit sits at a 33-year-low 4.98% — the money is there, demand is not. Dispersion stays the trade: own the private compounders that survive a lean quarter, fade the SCB paper the new regime tests first.
FX & External
Taka firms to 123.20 and gold sheds $65; reserves stay thin.
External Flow Balance
USD/BDT firmed to 123.20 from 123.48 over the week; July flows held — exports $4.03bn, trade gap -$1.77bn — while reserves stayed $36.42bn.
Reserves on the 31 Jul print, cover 6.28mo — 14 days old, the August refresh still awaited.
Treasury: the peg firmed on a thin buffer — watch 123.20 and the reserve refresh as Brent's premium eases off $90.
WATCH
- ◆Whether 123.20 holds or the taka resumes its crawl if Brent retests $90
- ◆The overdue August reserve refresh against the $36.42bn 31 Jul print
- ◆Whether gold's $65 pullback signals risk-on or a pause in the haven bid
RISK
- ▼Reserves drawing down while earned dollars stay soft — remittance a second month under $3bn
- ▼Brent's $6.91 premium over the $80 line re-widening the import bill
- ▼The premium US LNG cargo landing as a fresh claim on soft dollars
DSE Markets
DSEX tested 5,900, failed, and closed the week at 5,897 on soft breadth.
DSEX Index
DSEX closed the week at 5,897, testing and failing 5,900; turnover held Tk1,074cr while breadth flipped to 119 up, 231 down.
Cleared 5,903 midweek on Tk1,115cr — the first close above 5,900 in the window — before the retest failed.
Equity desk: a liquidity rally that loses breadth is a bull trap — fade unless turnover holds Tk1,000cr into a reclaim of 5,900.
WATCH
- ◆Whether DSEX reclaims 5,900 on positive breadth or falls back into the 5,822–5,903 range
- ◆Turnover holding above Tk1,000cr — accumulation versus a fading liquidity spike
- ◆Bank and NBFI scrip as the resolution regime reprices financial float
RISK
- ▼A failed breakout below 5,900 confirming a bull trap
- ▼Turnover slipping under Tk1,000cr, draining the rally of conviction
- ▼Soft breadth signalling the liquidity bid is narrowing, not broadening
T-Bonds & T-Bills
The 5y richened to 9.15% this week as the front held below policy.
BD Govt Yield Ladder
The 5y rallied off a flat 9.68% to 9.15% this week; the bill front held below policy at 9.19%–9.33%, the 10y static at 10.24%.
The 5y held 9.68% for eleven prints, then swung to 9.15% — the sharpest belly move in the window.
ALCO: 5s10s steepens to ~109bp as the belly richens — price term funding to the stable front, watch belly supply into FY27.
WATCH
- ◆Whether the 5y holds 9.15% or the belly cheapens on FY27 supply
- ◆The next bill auction — whether the front resumes cutting or holds below policy
- ◆5s10s near 109bp — the slope repricing long-dated fixed-rate books
RISK
- ▼Belly volatility — the 5y swinging 64bp in a handful of sessions signals thin depth
- ▼The falling front signalling weak credit demand, not just easy liquidity
- ▼Deposit and lending rates lagging the bill curve, squeezing bank margins
The week's biggest σ-move sat in the bond belly. The 5y, anchored at a dead-flat 9.68% for eleven prints, broke sharply lower — 9.79% to 9.35% to 9.15% — a 64bp richening off its high as duration demand returned. The bill front confirmed the direction, holding below the 9.50% policy: 91d 9.19%, 182d 9.32%, 364d 9.33%. With the 10y static at 10.24%, 5s10s steepened to roughly 109bp. Read together, this is the 30 July cut transmitting to the curve — the money market healed the same week the belly rallied. But a belly that swings 64bp in a handful of sessions is thin, not deep, and a front falling this fast reads as weak credit demand as much as easy liquidity — private credit is dead at 4.98%. The desk position: price term funding to the stable front, stay wary of belly supply into FY27, and watch whether 9.15% holds or the next auction cheapens it back.
Macro & Inflation
Private credit sits at a 33-year-low 4.98% while the 12m-avg holds 8.68%.
CPI Trend
The CPI 12m-avg held 8.68% on the Jun print; food at 8.6%, non-food 9.61% — the trailing read still elevated even as BB flags easing.
Highest since Dec 2025 (8.8% then) — the trailing average sitting above the 8.6% monthly food print.
MPC: the trailing average still elevated while private credit is dead at 4.98% — hold before easing further.
WATCH
- ◆The next 12m-avg print — whether the monthly turn pulls the trailing average down
- ◆Private credit at 4.98% — whether the 30 July cut revives borrowing
- ◆The August cooking-gas hike and Brent feeding cost-push into the next CPI print
RISK
- ▼Private credit at a 33-year-low 4.98% with M2 at 10.52% — liquidity present, demand absent
- ▼A razor-thin 0.34% real policy rate leaving no carry cushion post-cut
- ▼The August cooking-gas hike relighting cost-push before the inflation turn is confirmed
Remittance
July remittance held $2.82bn all week, a second month under $3bn.
Remittance Inflow
WATCH
- ◆Whether $2.82bn is a floor or the top of a slide after a second month under $3bn
- ◆The overdue August reserve refresh past the $36.42bn 31 Jul print
- ◆The Saudi flight entitlement rise to 84 — whether corridor capacity lifts inflows
RISK
- ▼Earned dollars softening while reserves draw and the energy bill climbs
- ▼The margin over the $1.77bn trade gap no longer growing
- ▼A second sub-$3bn month tipping into a slide
Fiscal
NBR stuck at Tk3.61tn all week while BB warns debt is outpacing revenue.
NBR Tax Revenue
Monthly NBR collection printed flat again this week, 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.
Treasury: revenue frozen while BB flags debt outpacing receipts and a premium US LNG cargo widens the FY27 gap.
WATCH
- ◆The next monthly NBR print — the Tk3.61tn line has not moved in fourteen prints
- ◆Whether Brent's slip off $90 narrows or the FY27 fuel-subsidy provision still widens
- ◆The US LNG purchase — whether it lands as bank borrowing or budget subsidy
RISK
- ▼A thin revenue base carrying the FY27 gap as receipts stall at Tk3.61tn
- ▼Debt outpacing revenue — BB's own flag this week
- ▼Govt bank borrowing crowding private credit already at a 33-year-low 4.98%
Iran War & Oil
Brent eased to $86.91 this week, still $6.91 above the $80 FY27 line.
Brent Crude
Brent eased to $86.91, WTI $81.05 — the spread near $5.86 — crude sliding off near-$90 as the war premium fades.
Off $88.79 a session ago and near-$90 midweek — still $6.91 above the $80 FY27 line.
Treasury: each dollar off Brent narrows the import bill and the FY27 subsidy claim — watch the $80 line and a $90 retest.
WATCH
- ◆Whether Brent keeps fading toward the $80 FY27 line or re-tests $90
- ◆The FY27 fuel-subsidy provision with spot $6.91 over the $80 assumption
- ◆The US LNG purchase and power cuts — how the energy bill is financed
RISK
- ▼A Gulf re-escalation carrying Brent back through $90 onto the import bill and the peg
- ▼Crude plus freight stacking onto a $1.77bn trade gap
- ▼The August cooking-gas hike compounding energy cost-push into the next CPI print
Every morning.
Free.