Global equity markets staged their largest single-session rally of the year on Thursday after the central bank delivered a statement that traders described as the most consequential pivot in nearly eighteen months.
The benchmark index closed up sharply, while the dollar slid against a basket of major currencies. Volume across the major exchanges came in well above the trailing average, according to data published by the exchange operator.
The market had been pricing in a much more cautious posture. What we got instead was a clear signal that the bar for further tightening is higher than anyone had assumed.
Strategists at several major banks moved quickly to revise their year-end forecasts. One published note, distributed to clients within the hour, called the announcement "the cleanest policy reset of the cycle so far," while another research desk argued the move was overdue given the recent run of softer inflation data.
Bond yields fell across the curve, with the move particularly pronounced in the front end. Credit spreads tightened modestly, and emerging-market currencies extended gains into the close.
Whether the rally holds will depend in part on tomorrow's payroll report, which several traders said now carries unusual weight given the new policy backdrop.