Norway's Sovereign Wealth Fund Considers Reducing Treasury Holdings
Norway’s $2.3 trillion sovereign wealth fund has proposed reducing its allocation to government bonds from 70% to 50%, potentially removing up to $106 billion in global sovereign bond holdings, including nearly $80 billion in U.S. Treasurys. The shift aims to redirect capital toward higher-yielding fixed-income assets like mortgage-backed securities supported by Fannie Mae (FNMA) and Freddie Mac (FMCC). This move reflects growing demand for better returns amid elevated yields and rising government borrowing. The proposed change could signal a broader trend among institutional investors seeking alternatives as U.S. Treasury demand softens, potentially increasing upward pressure on bond yields. While the $80 billion reduction is relatively small in scale compared to the overall size of the U.S. debt market, it may encourage similar actions by other reserve managers, further impacting Treasurys and global fixed-income markets.
Topics: fixed-income assets sovereign wealth funds treasury bonds