(Bloomberg) -- After clashing in recent years, Wall Street traders and the Federal Reserve are – for once – broadly in sync: The great monetary pivot is near as central bankers engineer a once-unthinkable soft landing in the world’s largest economy.

That’s the big-picture takeaway after the Fed gave its clearest signal yet that its historic policy tightening campaign is over by projecting more aggressive interest-rate cuts in 2024 – in the process igniting one of the biggest post-meeting rallies in recent memory.

Virtually no corner of financial markets was left out of a cross-asset advance which began Wednesday and extended into Thursday trading: Global shares spiked higher, with gauges from the tech heavy Nasdaq 100 to Brazil’s benchmark Ibovespa on track to close at record highs. Short-term Treasuries posted their best day since March, while world currencies surged against the dollar and corporate bonds rallied.

In all, it was the best Fed day across assets in almost 15 years, according to data compiled by Bloomberg. In their exuberance, traders largely declared victory for Fed Chair Jerome Powell’s bid to secure a disinflationary trajectory in a still-expanding business cycle.

“This is a massive paradigm shift on Wall Street, with the most aggressive rate-hiking cycle in decades coming to an end,” said Adam Sarhan, founder of 50 Park Investments. “The Fed is no longer dealing with inflation as public enemy No. 1.”

Investors are now pricing in six quarter-point rate reductions in 2024 by the Fed, twice the three penciled in by the central bank. Economists at Goldman Sachs Group Inc. revised their forecast to show cuts starting in March. 

What Bloomberg’s Strategists Say...

“The Fed delivered a satisfying year-end finale for both bond and equity bulls. It suggests smooth sailing for risk assets into the end of the year not only in the US but also across emerging markets.”

— Mary Nicola, macro strategist

Thursday’s data out of the US only further bolstered expectations for a soft landing. US retail sales unexpectedly picked up in November, while applications for US unemployment benefits dropped to the lowest level since October, near historic lows.

Of course, there’s no guarantee that the euphoria will last. Markets have piled into rate-cut wagers numerous times over the past two years, only to be caught flat-footed when the Fed didn’t shift.

Officials unanimously agreed to leave the target range for the benchmark federal funds rate at 5.25% to 5.5%, and Powell said they’re prepared to hike again if inflation picks up.

It’s not hard to imagine a couple of unexpected consumer price index or jobs prints over the coming months prompting traders to reverse course. And yet there were few on Wall Street bothered by such concerns Wednesday afternoon.

Powell’s remarks have “basically added fuel to the fire,” former New York Fed President and Bloomberg Opinion contributor William Dudley said on Bloomberg TV. “Powell talks about the long lags of monetary policy, but financial conditions are much, much more accommodative than they were just a few months ago.”

Advances by major indexes show just how wide-spread the rally has been. The Dow Jones Industrial Average closed at a record Wednesday, with the Nasdaq 100 and Ibovespa on pace to do the same today. Asian and European stocks rallied more than 1% Thursday.

The yield on 10-year Treasuries dropped below 4% for the first time since August, while the rate on 2-year notes slid 0.05 percentage point — extending its plunge of more than 0.3 percentage point in the previous session.

“We’re having a party,” said Kathy Jones, Charles Schwab’s chief fixed-income strategist. “In my 2024 outlook I was pretty positive on fixed income for next year. I was thinking we’d get to 4% on the 10-year, three cuts from the Fed, maybe 3.5 with a recession, and here we sit and we haven’t started the year.”

Every group-of-10 currency advanced versus the dollar on Wednesday too, with the gains continuing on Thursday. Exchange-traded funds tracking investment-grade corporate debt, junk bonds and commodities also extended their advances.

Following Thursday’s monetary policy decisions from the Bank of England and European Central Bank, in which officials pushed back against the prospect of imminent rate cuts, the debate may now become: Have traders gone too far, too fast?

DoubleLine Capital’s Jeffrey Gundlach doesn’t think so, saying on Wednesday that he expects US 10-year yields to fall toward the low 3% range as the Fed is likely to slash its target rate by a full two percentage points next year. Former Pacific Investment Management Co. bond king Bill Gross dismissed such euphoria, saying the yield is already about where it should be at just on 4%.

“We’ve broken down the trend lines and there’s a lot of room” below the current 10-year yield level, Gundlach said in an interview. “The economy is going to undershoot the downside and that is going to create a response. We will have to have a lot of money printing.”

--With assistance from Emily Graffeo, Katie Greifeld, Lu Wang, Michael Mackenzie and Aline Oyamada.

(Update with Thursday trading throughout)

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