Norway’s Pension Fund Signals Shift Away from US Treasuries

The proposal marks a fundamental change in how the $2.3 trillion fund views sovereign credit. NBIM argues that high government debt is no longer a localized issue but a systemic trait of developed economies, meaning the fund should demand a higher premium rather than holding Treasuries by default. Instead of exiting dollar assets, the fund intends to rotate capital into agency mortgage-backed securities, commercial MBS, and investment-grade corporate credit. This shift aims to lift non-government fixed income from 30% to 50% of its bond portfolio.

This decision mirrors a broader trend among major institutional holders. With Chinese Treasury holdings at an 18-year low and Japan actively trimming its stack, the reliable buyer base for Washington’s debt is thinning. Central banks are increasingly turning to gold, evidenced by a record 289 tonnes purchased in the second quarter. While no single entity is dumping US paper, the cumulative effect complicates Washington’s ability to finance record deficits without paying higher interest. As Norway’s patient capital moves toward private credit and alternative assets, the political and economic justification for other nations to hold US reserves as a default safety measure is beginning to fray.