Headlines
Banks flush yet idle; the DSE drifts to a fresh low on no volume.
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 easy at 9.37%; the 7-day holds 9.35%, no term stress.
FX Reserves
WATCH
- ◆Deposit-rate pass-through as the sub-policy bill front — 91d at 9.03% — reaches term funding
- ◆Whether the front cuts again or holds after the 30 July 50bp move
- ◆The overdue reserve refresh past the 1 Jul $36.42bn print — the external check behind the easy corridor
RISK
- ▼The easy corridor reaching the money market but not the 4.98% private-credit borrower
- ▼Deposit rates lagging the falling bill curve, squeezing bank margins into H2
- ▼A weak reserve refresh repricing the peg behind an easy front
Banking
The book holds frozen — NPL 32.26% on Q1, CAR 844bp under floor.
WATCH
- ◆Q2 2026 NPL disclosure finally landing the court-stayed loan overhang past the 32.26% Q1 print
- ◆The five-year banking-cleanup plan's resolution and recap terms for the SCB tail
- ◆Bank deployment — borrowing squeezed for lack of investment scope as private credit holds 4.98%
RISK
- ▼Court-stayed loan stock understating the printed 32.26% Q1 NPL ratio
- ▼SCB (State-Owned Commercial Bank) recapitalisation crystallising under the new resolution regime
- ▼Weak sheets unable to out-grow their bad-loan stock with private credit at 4.98%
The banking book is frozen and the freeze is the story: NPLs 32.26% on the Q1 2026 read, system CAR (Capital Adequacy Ratio) 1.56% on Q3 2025 — 844bp below the 10% floor, a cushion gone rather than thin. Neither moves until Q2 disclosure lands the court-stayed loan stock that already understates the printed ratio. What is new is the policy answer and the demand signal, and they point opposite ways. The state has floated a five-year plan to clean up the sector — a resolution runway for the SCB (State-Owned Commercial Bank) tail the market has long discounted. Yet banks now borrow less for want of investment scope, and private credit sits at 4.98%: liquidity is not the constraint, creditworthy demand is. A cleanup plan repairs the tail; it does not restart the engine. Dispersion stays the trade — own the private compounders, fade the SCB paper the resolution regime tests first.
FX & External
Taka firms to 122.01 on soft demand; the reserve refresh stays overdue.
External Flow Balance
USD/BDT firmed to 122.01 from 122.60 as importer dollar demand stayed soft; reserves $36.42bn against a $1.77bn trade gap, exports held at $4.03bn.
Reserves on the 31 Jul print, cover 6.28mo — the August refresh still awaited.
Treasury: the peg's calm is demand-led, not earnings-led — with Brent through $91, watch the reserve refresh over the daily spot.
WATCH
- ◆Whether 122.01 holds or the crawl resumes as Brent's $91 break lifts import demand
- ◆The overdue reserve refresh past the 31 Jul $36.42bn print
- ◆Remittance and export receipts — the earned-dollar side as inflows thin
RISK
- ▼Brent above $91 re-widening an import bill soft demand had been masking
- ▼A reserve refresh below $36bn confirming the drain soft trade data imply
- ▼Both earned-dollar engines soft — remittance $2.82bn, exports held at $4.03bn
DSE Markets
DSEX slips to a fresh low of 5,769.71 as turnover caves to Tk733cr.
DSEX Index
DSEX slipped 0.07% to a fresh window low of 5,769.71 as turnover caved to Tk733cr; breadth healed to 140 up, 198 down from 54/318.
A fresh low across the 5,770–5,897 window — the 5,822 floor that broke last week now sits above.
Equity desk: a fresh low on record-thin turnover is exhaustion, not a bottom — stay flat until volume returns on up days.
WATCH
- ◆Whether turnover recovers on up days or keeps thinning below Tk733cr
- ◆Breadth holding its 140/198 repair or rolling back toward the 54/318 washout
- ◆Foreign portfolio flows as the external bid stays thin
RISK
- ▼A fresh low on no volume inviting the next leg once a seller appears
- ▼The Tk733cr turnover signalling participation has drained, not stabilised
- ▼Presidential-poll event risk keeping domestic risk appetite sidelined
The DSE is not crashing — it is emptying out. DSEX printed a fresh window low at 5,769.71, but the day's move was a rounding error at -0.07%, and the internals tell the real story: decliners fell to 198 from the 318 washout, advancers rose to 140 from 54, yet turnover caved to Tk733cr, the thinnest of the window. Abating selling with absent buying is a market that has run out of sellers before it found a buyer. The backdrop explains the vacuum. The easing curve has rallied hard — the 10y down 82bp to 9.42% — and banks now borrow less for want of investment scope while private credit sits at 4.98%. Cheap money is finding risk assets no more than it is finding borrowers: the same demand vacuum, priced in two markets. Stay flat — a low made on Tk733cr is not a bottom to trust until volume confirms it.
T-Bonds & T-Bills
The 10y rallies 82bp to 9.42%; 5s10s flattens to ~27bp, front sub-policy.
BD Govt Yield Ladder
The 10y collapsed 82bp to 9.42% from a static 10.24%; the 91d bill holds 9.03% and the 5y 9.15%, flattening 5s10s to ~27bp.
The 10y sat at 10.24–10.25% across the whole window until today; the front has cut at every recent auction.
ALCO: 5s10s flattens to ~27bp on one 10y print — fund term to the front, but confirm the long-end move before extending duration.
WATCH
- ◆Whether the 10y's 9.42% print holds or mean-reverts toward the 10.24% it sat at all window
- ◆The next bill auction — whether the 91d cuts below 9% from 9.03%
- ◆5s10s at ~27bp — the flatter slope repricing long-dated fixed-rate books
RISK
- ▼A 10y round-trip back to 10.24% if the single-print rally proves thin
- ▼Belly and long supply into FY27 re-steepening the curve
- ▼Deposit and lending rates lagging the falling bill curve, squeezing margins
The curve flattened in a single print, and the size of the move demands both attention and caution. The 10y had sat at 10.24–10.25% across the entire window; today it prints 9.42%, an 82bp collapse that drags 5s10s from ~109bp to ~27bp against a 5y anchored at 9.15%. Read straight, the long end has finally caught the rally the front has led for weeks — the 91d bill at 9.03% and the 364d at 9.17%, the whole front sub-policy as BB's easing feeds through. Read sceptically, an 82bp one-day move in an illiquid long bond is as likely a marks artifact as a genuine repricing, and the round-trip risk back to 10.24% is real. Either way the desk conclusion holds: fund term to a front that keeps falling, but do not extend duration into the 10y on a single unconfirmed print. Watch the next auction and a second 10y mark before trusting the flatter curve.
Macro & Inflation
Private credit stalled at 4.98%; the 12m-avg still 8.68% on the Jun print.
CPI Trend
The CPI 12m-avg held 8.68% on the Jun print; food 8.6%, non-food 9.61% — the trailing read still elevated as BB keeps easing.
Highest since Dec 2025 (8.8% then) — the trailing average still above the 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 from 8.68%
- ◆Private credit at 4.98% — whether soft imports keep working-capital demand absent
- ◆Brent's $91 break and the fast-burning LNG subsidy feeding energy cost-push into the next CPI print
RISK
- ▼Private credit at 4.98% with M2 at 10.52% — liquidity present, demand absent
- ▼A thin 0.82% real policy rate leaving little carry cushion post-cut
- ▼Brent through $91 and energy-subsidy strain relighting cost-push before the inflation turn confirms
Remittance
July remittance holds $2.82bn, a second straight 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 reserve refresh past the 31 Jul $36.42bn print
- ◆Brent above $91 lifting the import bill against a soft inflow side
RISK
- ▼Earned dollars softening while reserves draw and Brent's $91 break lifts the energy bill
- ▼The margin over the $1.77bn trade gap no longer growing
- ▼A second sub-$3bn month tipping into a slide
Fiscal
NBR still stuck at Tk3.61tn while 43% of the LNG subsidy is already gone.
NBR Tax Revenue
Monthly NBR revenue 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.
Treasury: revenue frozen while 43% of the LNG subsidy is spent in six weeks — the FY27 gap widens from the spending side.
WATCH
- ◆The next monthly NBR print — the Tk3.61tn line has not moved in fourteen reads
- ◆The LNG subsidy burn rate — 43% spent in six weeks with Brent through $91
- ◆Govt bank borrowing crowding private credit already at 4.98%
RISK
- ▼A thin revenue base carrying the FY27 gap as receipts stall at Tk3.61tn
- ▼The energy-subsidy claim widening as Brent breaks $91 above the $80 FY27 line
- ▼Over 90% of economic units outside the TIN net capping any revenue lift
Iran War & Oil
Brent presses to $91.52, now $11.52 above the FY27 $80 line.
Brent Crude
Brent pressed to $91.52 from $90.74, WTI $84.31 — crude extending the $90 break rather than fading to the $80 line.
Up from $90.74 last print and now $11.52 above the $80 FY27 line — a second push through $90.
Treasury: each dollar on Brent re-widens the import bill and the FY27 subsidy claim — the $90 break holds, watch $95.
WATCH
- ◆Whether Brent presses on above $91.52 or the fade resumes toward the $80 FY27 line
- ◆The FY27 fuel-subsidy provision with spot now $11.52 over the $80 assumption
- ◆The LNG subsidy burn — 43% gone in six weeks — as crude holds above $90
RISK
- ▼Brent above $91 stacking crude plus freight onto a $1.77bn trade gap
- ▼The fast-burning LNG subsidy compounding energy cost-push into the next CPI print
- ▼A Gulf re-escalation carrying Brent higher onto the import bill and the peg
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