The basic investment thesis for 2015 was that the US economy would strengthen and force the US Fed to hike rates

The basic investment thesis for 2015 was that the US economy would strengthen and force the US Fed to hike rates. Accordingly, the most crowded trade this year was long US dollar. The primary driver of expectations about US interest rates has been both the unambiguous guidance from the US Fed, and expectations that labour market tightness would spark higher wages and inflation. Interestingly, two things could spark a rethink of market expectations - firstly, lower oil prices are alleviating US (and global) inflation from the supply side, and secondly many overlook the fact that the US labour market recovery, whilst high in numbers, is low in quality. Indeed, two-thirds of US jobs created since the labour market trough in 2009 has been in occupations that pay less than USD20 per hour - which suggests that there may be less wages pressure from a tight labour market than traditionally has been the case. (VIEW LINK)