Investors should brace for market turmoil over the next 12 months.

That’s the warning from Morgan Stanley’s cross-assets team, who says their cyclical indicator has flipped to “downturn” from “expansion,” a shift that has historically led to weaker returns for stocks and other risky assets, along with an elevated chance of a recession. In a note dated on Sunday, the bank advised market participants to go on the defensive, eschewing U.S. stocks for the safety of Treasurys and cash.

See: Can Trump’s trade tussle sink a chance at the longest economic expansion in history?

“With U.S. data still above-average but deteriorating, our cycle indicator has shifted out of ‘expansion’ to ‘downturn’ for the first time since 2007,” wrote Serena Tang, a cross-assets strategist, adding that its downturn phase indicates when the improvement in economic data has started to slow or weaken outright.

“With the cycle indicator in ‘downturn’, together with still-rich valuations and increasing uncertainties about trade tensions, we reiterate our call for a defensive stance,” wrote Tang.

Morgan Stanley’s cyclical indicator aggregates economic and financial markets data, including the yield curve’s slope, consumer confidence and debt issuance. In particular, credit issuance, consumer confidence and manufacturing gauges have started to soften in recent months.

Still, investors still have some time before they start to undergo serious pain as lower returns come mostly at the back-end of the 12-month period following the entry into the ‘downturn’ phase.

Tang points out that Morgan Stanley’s cyclical indicator flashed a ‘downturn’ as early as November 2006, when U.S. equities were still on the rise before they embarked on their spectacular tumble as a financial crisis slammed the global economy,.

Nevertheless, the gloomy backdrop for global trade along with elevated equity and corporate bond valuations means investors shouldn’t take any chances and start to cut down their holdings of risky assets now, said Tang.

Stocks and credit markets have already come under pressure as President Donald Trump’s threat to escalate its trade spat against China in May renewed fears that a tariff battle could dent the global economy’s momentum at a vulnerable time. Trump’s tariff threat against Mexico last week, and reports that the administration had contemplated slapping import levies on Australia have jolted investors.

The S&P 500 SPX, +0.29% and the Dow Jones Industrial Average DJIA, +0.19% posted a more than 6% loss in May. Stocks were flipping between small gains and losses on Monday.

Read: How trade wars cost U.S. stock market $5 trillion in forgone returns so far, according to Deutsche Bank

Exchange-traded funds tracking the performance of indexes that track corporate bonds from below investment-grade issuers have come under pressure. The iShares iBoxx $ High Yield Corporate Bond ETF HYG, +0.06% and SPDR Bloomberg Barclays High Yield Bond ETF JNK, -0.07% fell more than 2%in May.

To be sure, only 40% of the shifts to a downturn phase has preceded recessions. Still, that probability is much more elevated than other recession estimates including those from the New York Fed.

Check out: Trade war could cause U.S. recession in less than a year, Morgan Stanley say