Investors and economists for months have clung to the hope that rational self-interest would ultimately bring a negotiated end to the United States-China trade war, perhaps even ahead of the U.S. midterm congressional elections next month.
But such optimism is increasingly seen as misplaced as more experts are now bracing for a protracted conflict — with little optimism for resolution.
"When it comes to trade we're starting to get to the point where people are pricing in the worst," Patrik Schowitz, global strategist at J.P. Morgan Asset Management, said Monday on CNBC's "Squawk Box."
"There is quite a lot of talk now that this is going to be a permanent new situation, that we are heading for a new cold war," Schowitz added. "So I think people are starting to price in the worst possible outcome."
Yves Bonzon, chief investment officer at Julius Baer said the private bank had believed that the threat to profits at U.S. companies listed on the S&P 500 from intensifying trade tensions would be enough to bring about a truce.