BofA Says Bonds to Beat Stocks in Debt Gridlock: Credit Markets

Strategists from Bank of America Corp. to Wells Fargo & Co. predict dollar-denominated corporate bonds will outperform stocks this month if political gridlock persists with the government partially shut down this week.

Company debt in the U.S. has gained 1 percent since Sept. 17, the day before the Federal Reserve surprised investors with its decision to maintain unprecedented economic stimulus, compared with a 0.5 percent decline on the Standard & Poor’s 500 Index. In August 2011, the last time legislators approached a deadline to raise the debt limit, investment grade bonds returned 0.13 percent while U.S. stocks declined 5.4 percent.