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Bank of America said it believed commodities will be the top “run-it-hot” trade next year.
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Strategists expect strong returns due to factors like inflation & Trump’s economic policies.
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The sector has already seen handsome returns this year as investors see it as a key part of the AI trade.
Commodities are set to be the hot trade in ’26.
The corner of the market — often outshone by flashier risk-assets like stocks and crypto — is the best “run-it-hot” trade that investors could pick up in 2026, according to Bank of America. That’s due to a cocktail of factors in the economy that should allow commodities to keep outperforming, a team of strategists led by Michael Hartnett wrote on Friday.
BofA has floated its “run-it-hot” thesis previously, which is that the economy of 2026 will be characterized by strong growth, fiscal and monetary stimulus, and potentially hotter inflation.
“We say long commodities the best ‘run it hot’ trade in ’26, and long despised oil/energy without question the best ‘run-it-hot’ contrarian trade,” the team said.
Commodities are on track to log stellar returns in 2025, largely because the metals and energy commodities are a key investment focus in the AI data center boom.
The Vanguard Commodity Strategy Fund, one popular mutual fund that tracks commodity investments, is up 17% year-to-date, beating the S&P 500.
Industrials, which is a commodities-heavy sector of the benchmark stock index, is also up 17% since January. Utilities and energy are up 15% and 7% year-to-date, respectively.
Here are some of the reasons the bank thinks that momentum can continue:
Trump’s economic policies. The president’s economic agenda appears poised to stimulate further growth in the economy over the next year, strategists said, a factor that could support commodities investments.
Appeal over bonds is growing. Excess fiscal spending in recent years has helped commodities to outperform other investments that are traditionally thought of as safe havens, like bonds, BofA said.
Globalization is breaking down. World trade is starting to become more fragmented due to factors like geopolitical conflict, supply chain issues, and trade barriers like tariffs. In theory, that should boost commodities, which are frequently transported and are used as inputs in a variety of goods.
Inflation. Higher inflation expectations can cause some commodities, like gold, to rise. The precious metal is up 60% this year and on track for its best performance since the 1970s, largely because investors view it as a safe haven and an inflation hedge.
