Norway’s $2.3-trillion sovereign fund proposes large cuts to U.S. Treasury holdings — SkimNews
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- Norges Bank Investment Management proposed cutting government bonds in its benchmark bond index from 70% to 50%, with U.S. Treasuries — its biggest holding — receiving the largest cut within that reweighting.
- The shift would slash the fund's U.S. Treasury holdings by nearly $80 billion from current holdings of about $215 billion as of end-June, with weighting to U.S. government bonds in the bond index falling from 34.1% to 21.9%.
- Total U.S. dollar exposure in the bond index would barely move — from 52.9% to 52.5% — as the fund would reallocate within the dollar market toward U.S. mortgage-backed and government-related bonds rather than exiting dollars.
- Japanese government bond allocation would rise from 4.6% to 7.4%, euro area debt would fall from 16.8% to 14.1%, and the UK share would stay at 4.2%, aligning the index more closely with broader market weights.
- Any changes are unlikely to take effect before several months into 2027 and must pass through a January recommendation to Norway's finance ministry, the fund's annual white paper next spring, and a parliamentary hearing.
- In a separate letter, the fund proposed increasing unlisted assets — already permitted for real estate and renewables — to reduce concentration risk from soaring valuations of a handful of U.S. tech stocks.
- ABP, Europe's largest pension fund, also cut the value of its own U.S. Treasury holdings in Q1 2025, per a prior Reuters report cited at the article's end.
Why it matters: The world's largest sovereign fund would pull nearly $80 billion from U.S. Treasuries while total dollar exposure barely shifts (52.9% to 52.5%) — the move is a reshuffle inside the dollar market toward mortgage-backed securities, not a dollar exit. The pullback lands as long-term borrowing costs are already climbing on inflation and debt concerns, and follows Dutch fund ABP's own Q1 Treasury trim, underscoring creeping institutional unease with U.S. government debt.
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