Bank of America Corp. (NYSE:BAC): Current price $14.05
Bank of America strategists are among many from the big financial institutions who are predicting that dollar-denominated corporate bonds will beat the performance of stocks in October if political gridlock remains with the government partially shut down. Company debt in the United States has risen 1.1 percent since September 17, which was the day before the Federal Reserve jolted investors with its decision to maintain its economic stimulus, versus a 0.5-percent slip on the Standard & Poor’s 500 Index.
In August 2011, the most recent time when legislators approached a deadline to raise the debt limit, investment grade bonds returned 0.13 percent while domestic stocks declined by 5.4 percent. Michael Contopoulos at Bank of America says that even with corporate bonds trading at yields within one percentage point of all-time lows, they are on track to perform better than stocks this month, since any weakening of the economy from the shutdown will probably prolong the Fed’s of monthly purchases of $85 billion in mortgage bonds and Treasuries.