I would not trim mega-caps solely because payrolls beat. The 162,000 jobs and +55,000 revisions clearly weaken the slowdown narrative, but wage growth easing to 3.1% YoY keeps this from being an unequivocally hawkish report.
The more interesting signal is the muted market reaction. If such a large payroll surprise only nudges yields and rate expectations, investors may already be looking past employment towards CPI. Strong growth can support earnings, but high-duration mega-caps remain vulnerable if inflation forces yields another leg higher.
For me, CPI is the deciding catalyst. A benign print could turn strong payrolls into a soft-landing positive. A hot print would create the more dangerous combination: resilient growth, sticky inflation and higher-for-longer rates. I would hold quality mega-caps, but avoid adding aggressively before CPI.
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- JustinCooper·09-07 14:02Muted reaction probably also means CPI vol was already priced in, so the payroll surprise got partially absorbed. Wage growth at 3.1% is still the cleaner tell hereLikeReport