- Goldman Sachs co-CEO Gutman urges governments to reduce budget deficits to lower borrowing costs
- He highlights rising sovereign borrowing costs as a concern for Western economies and bond markets
- US 10-year Treasury yield slightly eased, while French 10-year bond yield increased amid financial worries
Advocating for tighter fiscal discipline and stronger, sustainable economic growth, Goldman Sachs International co-CEO Anthony Gutman said governments must reduce budget deficits to ease borrowing costs and bring greater stability to bond markets.
In an interview with CNBC's Squawk Box Europe on Monday, Gutman said rising sovereign borrowing costs were becoming a growing concern for Western economies, citing recent swings in US Treasury and French government bond markets.
“We need lower fiscal deficits, and we need more durable economic growth,” Gutman said, identifying the two as key requirements for addressing the pressure in government debt markets.
Despite September's softer-than-expected US jobs data, Treasury yields climbed on Friday. By Monday, the yield on the widely watched 10-year US government bond had eased by around 1 basis point to 5.2581%.
French sovereign debt came under renewed pressure, with the yield on the 10-year government bond climbing by over 1 basis point to 4.8812%, as investors remained wary of the country's strained finances and unsettled political landscape.
Gutman said governments faced difficult trade-offs as they sought to balance economic support with the need to control borrowing and debt levels.
The existing fiscal backdrop, he added, was making it harder for policymakers to tackle these challenges.His comments came as political uncertainty remained elevated in Europe.
Spain's Prime Minister Pedro Sanchez announced plans for a snap general election on November 29, adding to concerns over policy predictability across the region.
Gutman said the election cycle itself was contributing to instability for businesses by creating uncertainty around future government policies.
However, he said a combination of lower public spending and stronger economic growth could provide greater confidence to businesses and investors.
The Goldman Sachs executive's remarks come as investors closely monitor sovereign bond markets, with elevated yields raising financing costs for governments and potentially increasing pressure on businesses and households.
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