Negotiators for the White House and House Republicans resumed talks on lifting the U.S. debt ceiling amid an impasse just days before a potentially catastrophic default, according to a person familiar with the matter.

Talks between President Joe Biden’s team and representatives of House Speaker Kevin McCarthy had been at a standstill since White House negotiators left the Capitol on Tuesday. 

“I firmly believe we’ll be able to get there,” McCarthy said of prospects for a deal to avert default, speaking to reporters as his negotiating team was on its way to the session.

READ: How could the U.S. debt ceiling standoff affect Canada? Here’s what economists say

Representatives for Biden and House Republicans began meeting about noon in White House Budget Director Shalanda Young’s office suite. The change in locale comes a day after Republican Patrick McHenry, one of McCarthy’s negotiators, bragged that the talks have all been held in the Capitol because, in his view, the GOP has the upper hand.

U.S. stocks are showing increasing signs of concern over the standoff, with the S&P 500 index down 0.9 per cent early Wednesday afternoon, after a 1.1 per cent slump on Tuesday. In the Treasuries market, investors are demanding ever-higher premiums on bills that mature when the government is seen most at risk of default. Rates on Treasury bills due June 1 surpassed 7 per cent early Wednesday afternoon.

Treasury Secretary Janet Yellen said Wednesday that the world is just seeing the beginnings of the potential market stress if the debt crisis continues.

JPMorgan Chase & Co. chief U.S. economist Michael Feroli wrote to clients Wednesday warning that his team now puts the odds of hitting the June 1 “X-date” without a deal “at around 25 per cent and rising.”

Yellen, who has warned the U.S. could run out of money to pay its bills as early as June 1, said the Biden administration’s focus is on completing a debt-limit deal rather than contingency planning for a default.

“We are committed to not having missed payments and raising the debt ceiling,” Yellen said Wednesday via video conference to a Wall Street Journal event in London.

House Republicans have escalated their accusations that Biden lacks urgency in negotiations, while a Democratic aide called McCarthy unwilling to compromise across a wide spectrum of disputed points, threatening the legislative prospects of a deal.

It is not unusual for Congress to strike budget deals at the last minute when the pressure becomes great enough to force negotiators to make painful choices.

If a default did occur, economists project it could send the U.S. into a recession, with widespread job losses and higher consumer borrowing costs spilling into the coming election year.

“The current standoff over the U.S. debt ceiling has the potential to wreak more havoc on the economy than any previous go-around,” wrote Bloomberg Economics chief economist Anna Wong.