Crispus Nyaga

Crispus Nyaga is a Nairobi-based trader and analyst. He started trading more than 7 years ago as a student. He has published in several reputable websites like The Street, Benzinga, and Seeking Alpha. He focuses mostly on G20 currencies, commodities like Crude oil and Gold, and European and American large-cap companies.

On Friday, Baker Hughes released the number of inventories in the United States. The numbers showed that the number of oil rigs in the US increased by 7 to 854. This was a continuation to the ramp-up in production that started in January 2016, when the US had just 332 oil rigs. The total rig count in the US, that combines the natural rigs wells increased to 1049, which was higher than the previous week’s 1045. The increase in oil rigs is probably the reason why the price of crude oil has started the week by declining sharply as shown in the chart below.

On Friday, the Department of Agriculture released the February’s World Agricultural Supply and Demand Estimates (WASDE). This is a monthly report that shows the estimated demand and supply metrics for the agricultural sector. The report showed that the ending stocks for wheat had increased by 36 million bushels. The production of wheat for 2018/9 was raised by 1.3 million tons, mostly because of a huge supply from Russia. Corn imports are expected to be lower with production also lowered. The harvested area is also expected to be low. The production of soybeans is expected to be lower while US beet sugar production is expected to be unchanged. The chart below shows the reaction of these crops to the WASDE report.

In the United States, talks between the Democrats and Republicans broke down over the weekend. The two sides were negotiating on how to fund the government operations in a bid to prevent another government shutdown. The talks have been ongoing and have been geared towards coming up with a deal that will protect the undocumented immigrants while also funding the Trump wall. According to the Wall Street Journal, the two negotiating teams had cut off communications. This means that a government shutdown will likely happen this week. With the country already in election mood, there is a likelihood that the shutdown will continue for a longer time than expected.

The problems in the European Union continued over the weekend as Italian populist government attacked the central bank and the stock market regulator. Matteo Salvini, the country’s head of the League party said that the leaders of these organization deserved to be removed and ‘jailed for a long time.’ This came after the two were attacked by Luigi Di Maio, who leads the anti-establishment Five Star Movement. This also came a week after Mario Draghi, the ECB president and the former Bank of Italy president said that the independence of the central bank was under threat. All this comes at a time when Italy is going through a major challenge in its economy. Recent data showed that the economy is in a recession.

Over the weekend, problems in Deutsche bank continued as its funding costs continue to rise. Last week, the bank sold more than €3.6 billion in euro-dominated debt, paying 180 basis points over the benchmark two-year bond. The bank also paid 230 basis points over the benchmark on a seven-year bond. That was a higher rate than other European banks. This comes as the bank considers merging with its German competitor, Commerzbank.

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