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 Friday, July 23rd at 11.30 a.m. in New York.

You might have started hearing in the news about the debt ceiling, and about how if Congress

doesn't raise it by the end of the month, that the government will run out of money.

This obviously sounds concerning if you're an investor, and it can be, but here's three

reasons we're not concerned, at least not yet.

First, while the debt ceiling suspension ends at the end of July, that's very likely

not when the U.S. Treasury's general account will run short of cash.

Rather, cash management measures likely extend this deadline by a few months.

Earlier this week, the Congressional Budget Office estimated that the real deadline was

sometime in October or November.

Similarly, our economists have estimated that the deadline would be in November.

Second, there's a clear policy pathway to avoid the Treasury running out of cash.

The budget reconciliation process.

A vote to further suspend the debt ceiling is likely eligible to be included in the budget

reconciliation package that the Democrats are reportedly putting together to address

broader infrastructure and social spending goals.

While this won't be easy to pass by any means, our base cases that Democrats are more

likely than not to get it done this fall before the November deadline are economists

...