Trump’s ‘run it hot’ economic strategy may keeps stocks rolling. Not so much for bonds.

Subscribe to enjoy similar stories. A list of reasons to be bullish laid out succinctly in a weekly Bank of America report suggests stocks are likely to extend their record run well into the coming year. The president’s economic plans have a lot to do with it.

It also offered a glimpse into why the bond market remains pessimistic on interest rates, inflation, and the deficit at the same time—much of which is also due to Trump’s policies. A key takeaway from the BofA report is that the Federal Reserve’s plans to purchase billions in Treasury bills are being seen as a form of quantitative easing that will keep market yields lower into the first half of 2026. Chair Jerome Powell told the media the move wasn’t related to QE.

Still, the bank said in a separate report that “the important point here is that the Fed will keep liquidity pipes open, because directly or indirectly someone has to finance the record fiscal deficit." Add in the idea of a so-called tariff refund floated by President Donald Trump and the continuing decline in gas prices, as well as a surprisingly resilient job market, and it’s easy to construct a positive backdrop for stocks and the economy in 2026. “Fed QE, Nvidia chips to China, $2k stimmy checks, gas prices back below three bucks … no wonder we’re all max bullish," the BofA Flow Show report said. The BofA report suggests, however, a view of Trump’s various policies that could be construed as part of a political strategy to “run the economy hot" into next year’s midterm elections to offset the weakness seen in recent election polling.