Traders and regulators have fretted for more than a year that mayhem might ensue if U.S. mutual funds sought to sell rarely traded bond investments. After junk-bond prices posted their largest drop since 2011 on Friday, investors say they are bracing for another difficult week, likely featuring hectic trading and large splits between buy and sell orders. Gaps as wide as 10% between the price bondholders are willing to accept and buyers are willing to pay are likely to be commonplace until at least the conclusion of the Federal Reserve’s two-day meeting Wednesday, hedge-fund and mutual-fund managers said. The worst selling lately has hit bonds of especially risky, or distressed, companies, reflecting the turmoil at the Third Avenue Focused Credit Fund, the junk-bond fund that shook markets when it halted investors’ withdrawals last week, they said. But some traders were focusing on large price declines in the securities of […]