Anthony Gutman, co-chief executive officer of Goldman Sachs International, stated on Monday that Western governments need to implement spending reductions and foster robust economic growth to address escalating borrowing costs.
Speaking on CNBC’s “Squawk Box Europe,” Gutman highlighted that the rise in government bond yields is a widespread issue affecting major Western economies. He pointed to recent volatility in U.S. Treasurys and French government bonds as evidence of this trend.
“Fundamentally, what do we need to solve this problem? We need lower fiscal deficits, and we need more durable economic growth,” Gutman said, acknowledging that while energy costs and labor market dynamics are immediate concerns, fiscal policy remains the core challenge.
The comments came as the U.S. 10-year Treasury yield stood at approximately 5.2581%, slightly lower than Friday’s levels despite a weaker-than-expected nonfarm payrolls report for September. Meanwhile, France’s 10-year government bond yield rose more than one basis point to 4.8812%.
Gutman warned that Europe’s current election cycle is exacerbating policy uncertainty, making it increasingly difficult for leaders to navigate necessary fiscal trade-offs. His remarks coincided with Spanish Prime Minister Pedro Sanchez’s announcement of a snap general election scheduled for November 29, a move Gutman noted adds further instability for businesses operating in the region.
Despite these challenges, Gutman expressed hope that a combination of reduced government expenditure and higher growth could provide relief and stability to markets.
The US Treasury yields aren’t exactly happy right now. This isn’t just a European problem, folks.
Is Gutman suggesting Europe can just grow its way out of debt? Sounds naive given current demographic trends.
Interesting timing with Spain calling a snap election. Political chaos never helps bond yields stabilize.
Easier said than done. Cutting deficits during a recession is a tough sell to any voting public.