Welcome to Thoughts on the Market.

I'm Michael Zezis, Head of Public Policy Research and Municipal Strategy for Morgan Stanley.

Along with my colleagues bringing you a variety of perspectives, I'll be talking about

the intersection between U.S. public policy and financial markets.

It's Thursday, July 8th at 10.30 a.m. in New York.

While DC deliberates on fiscal policy, Americans aren't waiting around.

Quite the contrary, they're traveling and in growing numbers.

In fact, last week, domestic air travel actually surpassed 2019 levels.

Something most experts predicted would take years to happen after the pandemic.

And it's an important story for both fixed income and equity investors to understand.

In both markets, prices don't yet fully reflect the breathtaking pace of this recovery

and air travel.

Starting with equities, our colleagues see an opportunity in airline stocks, which they

rate as an attractive sector.

While this rating was long driven by their view that air traffic would recover faster

than expected, it's now maintained by signs of green

shoots and business travel, which could further boost U.S. airlines to pre-COVID levels

well ahead of industry expectations.

Of course, this is all made possible by the rollout of highly effective COVID vaccines

in the U.S., which so far continue to prove durable versus new variants and enable

commerce in the U.S. to operate with relatively few restrictions.

But if you want to be a little more defensive on this theme, try the bond market.

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