Soybeans are harvested with a Deere & Co. combine harvester in this aerial photograph taken above Tiskilwa, Illinois. Daniel Acker | Bloomberg | Getty Images

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.

"So this is why, from the beginning, we expected the U.S. administration to back off at some point, claim some concession from China," Zurich-based Bonzon told reporters in Hong Kong last week. But, he admitted, that scenario is not playing out. "I think we've probably been a bit slow to adjust to that new reality that this is not going away," he said, citing the growing realization that U.S. President Donald Trump's administration is determined in its efforts to "rebalance" the country's relationship with China. Indeed, the prospect of a protracted fight that is likely to drain economic and investment energy for much of next year, at least, is gaining ground.

'A denial factor'