Welcome to Thoughts on the Market.

I'm Michael Zezas, 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 Wednesday, August 4 at 10.30 a.m. in New York.

We focus again this week on fiscal policy.

As we've been arguing, the bipartisan infrastructure bill, which could get a vote in the Senate

this week, is just the beginning of a larger fiscal process that we think will result

in deficit expansion, and accordingly, support for above-average economic growth in 2022

and higher U.S. Treasury yields at year end.

But here's how we'll be tracking it in the coming weeks and months to see if we're

right or wrong.

The first thing we'll likely know is how much more money Congress is likely to spend in

addition to its prior budget baseline.

We already know there's good prospects for the bipartisan infrastructure package to pass

this week or next, and add $550 billion to that baseline.

What's likely next is the Senate approving, along party lines, a budget resolution in

the next week or so that enables its reconciliation plan.

But that resolution only sets the potential amount of spending.

It's not the final bill.

Still, the dollar amount of this resolution plus the bipartisan infrastructure plan should

equal the maximum top line on new spending.

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