Inflation is a clear and present danger, warns Wells Fargo's Michael Schumacher

• US 10-Year Treasury yield hit nearly 1-month highs, gaining ~20 basis points this week, driven by surging oil prices.
• Schumacher states inflation is a 'clear and present danger,' and the Fed will have a tough time easing rates.
• Equity markets show a disconnect from fixed income, which is fixated on inflation shock from surging oil.
• WTI Crude saw its biggest weekly gain in futures trading history, up 36% this week, settling at $90.90, while Brent was up 28% at $92.69.
• The February jobs report showed nonfarm payrolls unexpectedly falling by 92,000 (vs. +50,000 estimate), though its impact on bonds was short-lived.
• Schumacher advises the Fed to 'watch and wait' before making big policy moves, especially with a new chair coming in, as the tipping point for oil's impact on policy is still unclear.

Wells Fargo's Michael Schumacher warns that surging oil prices make inflation a 'clear and present danger,' leading to a tough environment for bonds and complicating the Fed's easing decisions. He suggests the Fed should 'watch and wait' given the uncertainty surrounding oil prices and their inflationary impact.