Global equities have seen outflows of $20.5 billion in the past week as "trade deal trauma" pushed more money into bonds, Bank of America Merrill Lynch said on Friday, the latest sign of how growing global trade tensions are roiling financial markets.

U.S. President Donald Trump's tweets on Sunday night, threatening to raise tariffs on Chinese imports, upended the previously calm market and wiped roughly $2 trillion from global equities this week.

"Risk pullback since May 1st highs follows furious rally, initiated by less-dovish PBoC/Fed, accelerated by trade trauma this week," the bank's strategists said, referring to central bank policies of the People's Bank of China and Federal Reserve.

The cash leaving stocks in the week to May 8 was the third biggest outflow so far this year, the bank said, and came as Trump threatened further import tariffs on Chinese goods, ratchetting up the prolonged trade spat between the world's two largest economies.

U.S. equities had outflows of $14 billion, the biggest since Jan. 30, BAML said, citing data from flow tracking specialist EPFR. The S&P 500 has risen 14.5% year-to-date.

Investors, seeking shelter from the trade dispute, kept pumping money into bonds, which saw inflows of $7.3 billion, making it the eighteenth straight week of inflows.

"A trade war, with across-the-board tariffs on US-China trade, would push the global economy towards recession," BAML warned in a separate note to clients.