Company debt looks more attractive than stocks

Stocks have best quarter in 10 years, oil has best three months in 19 years

By Nick Godt, MarketWatch

NEW YORK (MarketWatch) -- While U.S. corporate bonds have seen their best quarter in years, it wasn't as good as the show-stopping performance of U.S. equities, and some see this as a problem for an extended stocks rally.

For the quarter to date, the S&P 500 index /quotes/comstock/10u!spx.x (SPX 916.22, -10.43, -1.12%) is up 14.7%, its best quarter since 1998.

Corporate bonds, meanwhile, have jumped 11.26% this quarter, as fear and panic about the possibility of falling into a Depression subsided. That helped to lower their yields, which move inversely to price, but not enough to make them less attractive than stocks.

"The biggest challenge equities face at the moment may not be the economy, it's the triple-B corporate bond rate," said Jack Ablin, chief investment officer at Harris Private Bank, in a note.