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Investment-grade corporate bonds suffered their worst outflows since December 2016 in the week leading up to Wednesday, with dedicated funds shedding $3.1-billion, data from Bank of America Merrill Lynch showed on Friday.

High-yield and emerging-market bond funds also saw outflows of $800 million and $600 million respectively, but investment grade bore the brunt of selling, according to the BAML data which is based on analysis of numbers from the EPFR Global flow tracker.

The bank’s analysts described the current situation on global markets as “1998 redux,” referring to the Asian and Russian financial crises that year.

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“Fed tightening, U.S. decoupling, flattening yield curve, collapsing emerging markets, underperforming levered quant strategies ... all echo 1998,” they said. BAML particularly warned clients to watch credit spreads in “excessively indebted” Europe, China, emerging markets and U.S. companies in the “BBB” ratings category. The latter sector has $4.93 trillion of debt outstanding compared with $1.08 trillion in 2008, according to BAML.

Overall, bond funds in the past week shed $1.9 billion.

Outflows were more muted in equities, with just $200 million exiting stocks globally. A massive $4.7 billion flowed into exchange-traded funds, offsetting losses from mutual funds.

There was some good news for European equities, which recorded a small $200 million inflow, their first gain in 26 weeks.

On emerging markets, the scene of steep falls in recent weeks, BAML said it saw no evidence of capitulation, estimating that less than 20 percent of the inflows from 2016 to 2018 had been redeemed so far.

Emerging-market equity funds’ losses were limited to $200 million; emerging-market debt funds lost $600 million.

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