Norway's Sovereign Wealth Fund Plans to Cut ~$80 Billion in U.S. Treasuries
nashnova research
NBIM, manager of the world's largest sovereign fund, has proposed slashing government-bond weight from 70% to 50% in its benchmark — trimming roughly $80 billion in U.S. Treasuries — at a time when the Treasury market is already under strain.
Who is cutting, and by how much?
Norges Bank Investment Management (NBIM) manages the $2.3-trillion-plus Government Pension Fund Global. It has sent a formal proposal to Norway's finance ministry.
The core move: reduce government bonds' weight in the benchmark bond index from 70% to 50%.
This means → by the Financial Times' estimate, U.S. Treasury holdings alone would shrink by roughly $80 billion.
Where does the freed-up capital go?
The vacated allocation would mostly shift into agency mortgage-backed securities (MBS) — bonds guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae.
In plain terms = MBS carry credit quality close to Treasuries, but because borrowers can repay early, investors bear an extra layer of uncertainty — and get a slightly higher yield for it.
NBIM's logic: a 50% government-bond share is enough to cover liquidity needs, even in turbulent markets. The rest should chase "more sources of risk premium."
Does the dollar exposure change?
An NBIM spokesperson said dollar exposure drops by just 0.5 percentage points — "essentially unchanged."
Breakdown: U.S. Treasury weight falls 12.2 pp, while non-government U.S. fixed-income weight rises 11.4 pp.
UK gilt allocation stays flat; Japanese government bond allocation rises 2.8 pp.
This means → this is not a flight from the dollar. It is a reallocation within dollar assets, from Treasuries to higher-yielding instruments.
Why now?
Context one: the U.S.–Iran conflict has stoked inflation fears, and Treasury yields remain at multi-year highs.
Context two: Treasury Secretary Scott Bessent has intervened in the bond market multiple times, with limited effect.
NBIM also proposed weighting by outstanding market value rather than issuing country's GDP — this reflects a move toward the practice of other large sovereign funds.
Can this actually happen? What is the timeline?
The letter is only a recommendation — part of a broader proposal an "expert committee" is preparing for the finance ministry.
The final recommendation is due January next year. Norway's finance ministry will present its proposal to parliament in spring 2027.
This means → the real decision point is spring 2027, and parliament holds the final vote.
What has Norway's finance minister said?
In April this year, Finance Minister Jens Stoltenberg publicly stated the fund had "no plans to cut its U.S. exposure."
Yet NBIM's formal proposal now shows that the internal assessment has shifted.
In plain terms = a gap has opened between the political message and the professional managers' judgment — who prevails will be decided by parliament's 2027 vote.
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