Headlines
Brent -$11, CPI breaches 9%, trade gap widens — three-front week.
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)
Corridor unchanged; 9.04% CPI kills any easing optionality.
WATCH
- ◆Post-ACU reserves print — confirms ~$32.6B or lower
- ◆Next MPC response to 9.04% CPI — hawkish hold at minimum
RISK
- ▼May CPI above 9.5% forces emergency tightening consideration
- ▼Post-ACU reserves below $32B compresses import-cover buffer
Banking
NPL frozen at 35.73%; foreign-bank provisioning signals broader stress.
WATCH
- ◆FY26 budget recapitalisation allocation — session opens June 7
- ◆Q1 2026 BB disclosure — any NPL shift at 1.56% CAR triggers PCA
RISK
- ▼Forced merger without capital backstop triggers counterparty cascade
- ▼Foreign-bank provisioning surge broadens to wider loan book
NPL at 35.73% and CAR at 1.56% remained frozen for a seventh consecutive print — the system awaits a recapitalisation trigger that has not materialised. HSBC Bangladesh's 23% earnings decline on elevated loan-loss provisioning signals the NPL contagion has spread beyond domestic weak banks into the foreign-bank tier. The SIBL merger proceeding with ex-owners permanently excluded confirms the restructuring playbook is advancing, but the model struggles to attract new capital or talent at these depleted levels. Budget session opening June 7 is the next catalyst — the FY26 recapitalisation allocation will determine whether the system begins to stabilise or the ~BDT 1.4trn provisioning shortfall compounds further into the next fiscal year.
FX & External
Deficit at -$3.14B offset by record $3.76B remittance; ACU drain pending.
WATCH
- ◆Post-ACU reserves print — key positioning input
- ◆May trade data — whether $3B+ deficit persists
RISK
- ▼Post-ACU reserves below $32B if June inflows lag
- ▼Trade gap persistence above $3B/month outpaces remittance
Trade gap widening 24% to -$3.14B was the week's central external-sector story — imports outpacing the $3.17B export base by nearly 2:1. Record remittance at $3.76B and the $3.81B financial account surplus in Jul-Mar provide structural offset, but the book cannot rely on volatile inflows to cover a persistent goods deficit of this magnitude. The $1.51B ACU settlement for March-April mechanically drains reserves from $34.12B toward ~$32.6B; the post-settlement print is next week's most important positioning input. USD/BDT held at 122.75 through all five sessions — the peg remains defensible at current levels but import-cover margin compresses to roughly 3.5 months post-ACU.
DSE Markets
Equity market in holding pattern; oil relief failed to generate bids.
WATCH
- ◆DSEX breach below 5,200 on elevated volume
- ◆Floor price regulatory decision on trapped large-caps
RISK
- ▼Continued turnover decay signals institutional exit
- ▼Bank-sector repricing cascades into pledged-share haircuts
T-Bonds & T-Bills
5Y reverted to 10.23% — Monday's 52bp repricing fully unwound.
WATCH
- ◆Next 5Y auction demand — confirms acceptance of 10.23%
- ◆364d at 10.69% — any breach above 5Y signals inversion
RISK
- ▼April CPI at 9.04% may prevent sustained rally below 10.25%
- ▼FY26 fiscal supply calendar may re-steepen the curve
Macro & Inflation
March CPI at 8.60%; April breach to 9.04% confirms energy pass-through.
WATCH
- ◆May CPI — determines spike or new base
- ◆BB monetary policy response to confirmed re-acceleration
RISK
- ▼CPI above 9.5% in May forces emergency MPC consideration
- ▼Negative real deposit rates past -200bp trigger deposit flight
Remittance
Record $3.76B monthly remittance anchors the BoP position.
WATCH
- ◆May remittance — whether $3.5B+ flow sustains
- ◆Formal channel share vs hundi spread
RISK
- ▼Remittance reversion to $2.9B mean leaves BoP exposed
- ▼Gulf labour market cooling on oil price retreat
Commodities
Gold at $4,695/oz; LNG JKM at $15 — stable beyond crude.
Fiscal
NBR collected BDT 2.88trn YTD; budget session opens June 7.
WATCH
- ◆FY26 budget tabling — recapitalisation and revenue targets
- ◆ADP utilisation data for Q4 FY26
RISK
- ▼Revenue shortfall forces larger bank borrowing, crowding private credit
- ▼Weak ADP execution delays infrastructure spend
Iran War & Oil
Brent at $102.63 — war premium deflating, jet fuel cut confirms relief.
WATCH
- ◆Brent weekly close below $100 — structural de-escalation signal
- ◆Tanker insurance normalisation — Lloyd's weekly print
RISK
- ▼Hormuz incident reversal reprices Brent to $120+ within hours
- ▼OPEC+ supply commitment absent — floor risk remains
Brent's $11.37 collapse from Monday's $114 peak to Friday's $102.63 was the week's dominant move — a war-premium unwind that outpaced any reduction in physical supply risk. WTI broke below $100 mid-week and settled at $97.30, establishing a crude floor above OPEC+ comfort levels. For Bangladesh, the retreat mechanically reduces the monthly energy LC bill by ~$200M versus peak pricing, and Friday's BDT 22/litre jet fuel cut confirms downstream pass-through is active. Tanker insurance remains elevated and OPEC+ has made no incremental supply commitment — structural risk persists even as pricing shifts from crisis to elevated. The desk extends energy LC tenors to 90 days for investment-grade counterparties while holding elevated cash margins until Brent sustains below $100 for a full week.
Every morning.
Free.