Welcome to Thoughts on the Market.

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

And I'm Matt Hornbach, Global Macro Strategist for Morgan Stanley.

And on this episode of the podcast, we'll be talking about fiscal policy in Washington

DC and its impact on markets.

It's Wednesday, June 30th at 11 a.m. in New York.

This week, we stick with the topic of infrastructure policy in Washington DC and its influence

on the market.

And Matt, we want to bring you in because it might be the treasury market that could

be the place where infrastructure policy developments most visibly play out.

But before we get into that, I think there's one essential point that needs to be made

to investors.

In the past week, it may have been easy to get caught up in the headlines around bipartisan

agreement to boost infrastructure spending by $600 billion without any tax increases.

It's critical for investors not to be distracted by or obsessed with this bipartisan package.

You shouldn't assume this modest policy changes the end for fiscal policy.

Rather, it's just one part of the legislative process.

One that we think ends either in a big sweeping fiscal policy change on both spending in

the tax side or no changes at all before the midterm elections.

Said differently, we wouldn't count on a moderate middle path.

The dynamic here is probably go big or go home.

So Matt, given that dynamic, why is this policy debate becoming critical to the bond market?

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