Cracks are beginning to appear in the bond market.
Investors last week pulled billions from funds investing in high-quality bonds issued by US companies, according to a report from Bank of America Merrill Lynch.
That comes after panic hit the market for lower-grade, riskier debt this month.
Investors headed for the exits as interest rates increased, with at least two junk-bond funds, Lucidus Capital Partners and Third Avenue Focused Credit, closing their doors as a result.
The panic seems to have spread from junk to debt issued by companies with high credit ratings.
Around $3.5 billion (£2.35 billion) was withdrawn from investment-grade bond funds last week, according to BAML analysts led by Michael Hartnett. That’s the most in 17 weeks, and the worst showing since August.
Here’s how that chart looks:
In all, bond funds saw $25 billion in outflows in the past three weeks, concentrated in corporate credit and debt issued in emerging markets.
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