Norway's sovereign fund proposes cutting US Treasury exposure by up to $80 billion

Norges Bank Investment Management has sent a letter proposing a major rebalancing of the Government Pension Fund Global’s bond index, cutting the government-bond component from 70% to 50%. This adjustment would reduce the fund’s US Treasury holdings, valued at about $215 billion at the end of June, by nearly $80 billion, lowering the US government-bond share from 34.1% to 21.9%. At the same time, the fund seeks greater exposure to non-government securities, increasing US non-government debt weighting from 16.2% to 27.6% and modestly raising allocations to Japanese bonds.

The overall US-dollar weight would change only slightly, from 52.9% to 52.5%. The proposal awaits a response from Norway’s Ministry of Finance and, if approved, would be rolled out gradually to limit transaction costs and market impact. The move reflects concerns about inflation, rising public debt and higher long-term borrowing costs in global government-bond markets.