2026's 'Run It Hot' Economy: Why Commodities Are the Smartest 'Main Street' Bet

The global economy is on the cusp of a profound transformation. As the United States and much of the developed world pivot toward a "Run It Hot" economic strategy-characterized by aggressive fiscal and monetary stimulus, reindustrialization, and a deliberate embrace of higher inflation-commodities are emerging as the most compelling investment theme for 2026. This shift is not merely cyclical but structural, driven by a confluence of policy, technology, and geopolitical forces. Bank of America's recent analyses underscore this narrative, positioning commodities as both a growth engine and an inflation hedge in a world where traditional asset classes are losing their luster.

The "Run It Hot" Scenario: A New Economic Paradigm

Bank of America's Global Research team has crystallized the "Run It Hot" scenario as the defining framework for 2026. This strategy envisions an economy where growth remains robust, inflation persists above central bank targets, and fiscal stimulus-bolstered by the "One Big Beautiful Bill Act" (OBBBA)-fuels a surge in capital expenditures. The OBBBA, signed into law in July 2025, has permanently extended tax incentives for domestic manufacturing and infrastructure, creating a fertile ground for industrial activity.

The implications for commodities are profound. As Francisco Blanch, BofA's Head of Global Commodities, notes, the AI-driven infrastructure boom is a key driver. Data centers, which underpin the next wave of artificial intelligence, require vast amounts of energy and metals such as copper and gold. BofA forecasts gold prices to reach $5,000 per ounce and copper to hit $13,000 per ton by 2026. These projections are not speculative but rooted in the physical realities of supply constraints and surging demand.

Sector Rotation: From Tech to the Real Economy

The "Run It Hot" narrative also marks a strategic shift in asset allocation. For a decade, investors fixated on "digital giants" and speculative tech multiples. Now, the pendulum is swinging toward the "real economy"-industrials, energy, and commodities. This rotation is not a short-term fad but a response to structural changes in global trade and production.

Bank of America highlights the role of geopolitical fragmentation in this transition. As supply chains become more localized and protectionist policies gain traction, commodities-essential inputs for goods and services-will command a premium. The Vanguard Commodity Strategy Fund, which tracks this trend, has already delivered a 17% return in 2025, outperforming the S&P 500. Similarly, the industrials sector, heavy with commodity exposure, has mirrored this momentum.

The timing of this rotation is critical. BofA positions commodities as an early- to mid-cycle play for 2026, with energy-particularly oil-emerging as a contrarian bet. While the sector has lagged in recent years, factors such as easing Russia-Ukraine tensions and the AI-driven energy demand could catalyze a rebound. BofA's analysis underscores this duality.

Commodities as Inflation Hedges: A New Benchmark

In an inflationary environment, commodities have historically outperformed traditional hedges like Treasury Inflation-Protected Securities (TIPS) and real estate. Gold has surged 60% in 2025, marking its best performance since the 1970s. This outperformance is not accidental but a reflection of commodities' dual role as both growth assets and inflation buffers.

BofA's analysis underscores this duality. While TIPS and real estate remain relevant, their returns are increasingly constrained by low yields and flat housing markets. Commodities, by contrast, benefit from both demand-side tailwinds (AI, reindustrialization) and supply-side pressures (geopolitical tensions, resource nationalism). This makes them uniquely positioned to hedge against the kind of inflation that arises from structural bottlenecks rather than transient demand shocks.

Strategic Implications for Investors
For Main Street investors, the message is clear: commodities are no longer a niche bet but a cornerstone of a diversified portfolio. BofA's forecasts suggest that miners like Freeport-McMoRan and energy giants like ExxonMobil will be key beneficiaries of the "Run It Hot" cycle. Meanwhile, smaller-cap industrial players-such as Trane Technologies and GE Vernova-stand to gain from the electrification and cooling demands of AI infrastructure. Bank of America's analysis underscores the structural shift. The "Run It Hot" economy is not a gamble but a recalibration of priorities-a shift toward tangible assets in a world where intangibles have ruled for too long.

Conclusion

The "Run It Hot" economy of 2026 represents a paradigm shift in global markets. Commodities, once sidelined in favor of tech-driven growth, are now at the forefront of this new era. Bank of America's bullish forecasts, combined with the structural forces of reindustrialization and inflation, make a compelling case for a strategic reallocation toward the real economy. For investors seeking both growth and protection, the message is unambiguous: the smartest "Main Street" bet is to "run it hot" with commodities.