(Bloomberg) -- The dollar strengthened and U.S. equity futures rallied as Treasury Secretary Steven Mnuchin stepped back in the trade dispute with China over the weekend, saying the U.S. was "putting the trade war on hold." Analysts saw a mix of relief and concern about potential next steps, as the U.S. was viewed by some has having lost this round, with Horizon investments saying that "U.S. capitulation this weekend was stunning."
Here’s a sample of what analysts are saying:
Horizon Investments, Greg Valliere
"The financial markets can breathe easier about a trade war, as bickering Trump Administration officials backed down this weekend in talks with China." Valliere notes that he’s been arguing since late winter that "there’s no imminent trade war – just a trade dispute, which is now on hold because the U.S. needs China to keep diplomatic and economic pressure on North Korea ahead of next month’s summit."
"The U.S. capitulation this weekend was stunning – while agreeing to put tariffs on hold, the U.S. didn’t seek any specific penalties for China’s pervasive intellectual property theft; there was no specific dollar amount cited in vague pledges of trade reforms; there were no curbs on Chinese investment in the U.S. Trade hawks are incredulous."
Valliere also speculates Robert Lighthizer and Peter Navarro "have suffered stinging defeats and may leave soon. Steve Mnuchin and Larry Kudlow, free traders, have prevailed." He also sees "gloom on Nafta," as talks "have virtually ground to a halt; U.S. officials are now conceding that a new deal may not get ratified until 2019."
Raymond James, Ed Mills
Mills still believes "the final outcome will be a negotiated deal," though "plenty of work remains and working out specific details will remain a significant challenge."
"The turning point to-date in these negotiations appears to have been the Trump Administration’s willingness to take actions to block Chinese companies from key U.S. technologies, which could easily be ramped up if trade talks breakdown. While this weekend’s headlines are positive, we continue to monitor Congressional action on changes to U.S. regulatory approval for foreign investments (generally seen as anti-China), as this could complicate any final deal."
Cowen, Chris Krueger
"Nothing detrimental to the world economy is likely before the planned Singapore Summit with no timetable for details in the meantime."
"Once the Summit ends, game on. In our opinion, as goes the Summit, so go the tariffs. And if the Summit goes poorly, we expect the America First brigade to retake the commanding heights inside 1600 Pennsylvania Avenue."
Missing the May 17 Nafta deadline means the Trump Administration now risks having a treaty voted on before a "hostile" U.S. Congress (with potential speaker Nancy Pelosi) next year, along with a new Mexican president "who has very different views on trade."
Veda Partners, Henrietta Treyz
"Consensus around Washington is simultaneously ‘relief’ that the tariffs are not immediately going to be implemented but also a sense that the White House ‘lost’ this round as China has made no binding concessions for change to its intellectual property theft or forced technology transfer practices."
"The joint statement includes no strong language or specifics for China to make changes to its IP theft or forced tech transfer practices and largely kicks the can into the future."
"Being tough on China has been playing well at home in members’ districts and we expect that perhaps after ‘World Trade Week’ at the Commerce Department concludes at the end of this week, the focus on China may reemerge."
"While the current thawing of tensions is likely to hold at least until after the planned summit between Trump and North Korean leader Kim Jong-un in Singapore on June 12th, it is possible that the threat of the imposition of $50 billion in tariffs will resurface after that."
"Then again, the Chinese are well aware of this and are skilled at using both North Korea and their other array of carrots and sticks to keep trade tensions between the two countries from boiling over."
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