JPMorgan Chase & Co.’s Marko Kolanovic joined a chorus of Wall Street strategists Monday in warning that the US debt-ceiling impasse is yet another headwind threatening the outlook for equity markets.

The strategist reiterated a call to remain underweight both US and European stocks as X-date approaches, with a potential political standoff on a resolution exacerbating the already present threat of a recession — particularly if 2011’s debt event is any guide.

“While we acknowledge that at the time the severe selloff in risk assets due to the August 2011 US debt ceiling issue was amplified by the Euro debt crisis, it would be difficult to avoid at least a modest selloff in risk assets if the debt ceiling issue goes down to the wire as in August 2011,” Kolanovic said in a note to clients Monday.

US stocks wavered in muted trading Monday as investors weighed debt-ceiling discussions alongside the outlook for Federal Reserve monetary policy.

Kolanovic was one of Wall Street’s biggest bulls across much of the market rout in 2022 but has since U-turned on a deteriorating economic outlook this year, cutting the bank’s model equity allocation in mid-December, January and March.

Earlier on Monday, Morgan Stanley’s Mike Wilson delivered a similar warning on the debt-ceiling deadline, noting the bank’s clients said the issue is unlikely to be resolved without some near-term volatility. Meanwhile, BlackRock Investment Institute’s Jean Boivin and Wei Li said they expect a potential debt showdown to trigger renewed volatility.

Investors will get the latest clue Tuesday on prospects for a solution when President Joe Biden and House Speaker Kevin McCarthy reconvene after high-level talks on the matter this past weekend. Biden said Saturday that discussions were moving along but “not there yet.”

More broadly, Kolanovic and his team said equities appear disconnected from bond markets and softening economic data, in addition to debt-ceiling risks.

“Overall, we continue to see long-term leading economic signals pointing to bad times while the market makes rosier assumptions,” he said. “A rally built off a handful of stocks can easily reverse.”

This article was provided by Bloomberg News.