China’s resolve is cracking.

That’s how Peter Tchir, head of macro strategy at Academy Securities Inc., interprets the revelation that a Chinese delegation will travel to the U.S. later this month to try to defuse the trade dispute between the world’s two largest economies. The news pushed U.S. futures higher overnight, leaving them on track to erase some of Wednesday’s losses.

“Earlier this week, markets rose on weak economic data out of China, largely because many thought it would bring China to the table sooner than later, and here they are,” he writes. “More and more, it looks like the economic slowdown in China is driving them to a deal sooner, more easily, than seemed possible just a few months ago.”

Lackluster July economic data saw slower-than-expected Chinese retail sales and credit creation, with the year-to-date growth in fixed asset investment hitting a two-decade low. The clash over commerce has taken a meaningful toll on domestic financial assets. The Hang Seng Index has tumbled to its lowest level in over a year in the wake of Tencent’s earnings disappointment. The Shanghai Composite has slumped to multi-year lows.

The odds of a trade deal before the U.S. midterm elections—which would likely entail China agreeing to boost its purchases of American natural gas and agricultural products—might exceed 85 percent, according to the strategist.

Investors “now have to consider if the bottom is in” for Chinese stocks, added Tchir.

However, this apparent thawing of tensions doesn’t necessarily mean that China is on the verge of capitulating.

“U.S. and China are at odds on a wide range of trade and economic policies and the head of the China delegation has been described as ’feisty’,” writes Dennis Debusschere, head of portfolio strategy at Evercore ISI. “That suggests there will be more turbulence over the coming weeks and months as negotiations continue.”

In addition, the market reaction to news of U.S.-China trade talks is somewhat asymmetric, says Tchir, as risk assets hadn’t adequately priced in the breakdown in negotiations between the two sides. Meanwhile, the rebounds in Turkey and Italy—two sources of market angst—have come despite a dearth of positive changes to the underlying fundamentals.

“Yesterday cautious positioning felt good, today it feels stupid,” he concludes. “But it’s early and I think the headlines, while good, may be pricing in too much already.”