The world's largest sovereign wealth fund is paring back its exposure to Washington's debt. Norway's Government Pension Fund Global has proposed a significant reduction in its holdings of US Treasury securities. This strategic adjustment will trigger a massive capital reallocation, slashing roughly 80 billion dollars from its US sovereign debt portfolio.
Managed by Norges Bank, the fund is executing a broad overhaul of its global fixed-income investments. Under the proposal, US government bonds will drop from 34.1 percent to 21.9 percent of the fund’s fixed-income benchmark. At the end of June, the fund held approximately 215 billion dollars in US Treasuries. The proposed policy change represents a reduction of nearly 80 billion dollars. While Norges Bank clarified that the capital will not entirely leave the United States but will be redirected into other US corporate and asset-backed bond instruments to broaden exposure, the pullback from sovereign debt delivers a stern warning to international debt markets. Any benchmark modifications will take place gradually following formal review by Norway’s Ministry of Finance.
Norway is not an isolated actor. Official data from the US Treasury Department highlights a sustained retreat among major foreign sovereigns unwinding their Treasury positions over the past year.
China remains the primary driver of foreign Treasury sales. Between June 2025 and June 2026, Beijing’s holdings dropped from 731.4 billion to 633.4 billion dollars, representing a net divestment of 98 billion dollars within twelve months. In a longer historical context, this retreat is structural: mainland China held 1.3 trillion dollars in Treasuries in 2011, meaning its sovereign exposure has plummeted by more than half.
The list of foreign holders divesting from US sovereign paper is expanding across emerging and developed markets:
- Brazil reduced its Treasury holdings from 215.4 billion to 168.4 billion dollars, reflecting an annual contraction of 47 billion dollars.
- India trimmed its US debt position by 41 billion dollars, lowering its exposure from 227.4 billion to 186.4 billion dollars.
- Japan, while retaining its crown as the largest foreign creditor to the US, cut its portfolio from 1.155 trillion to 1.117 trillion dollars, unloading 38.1 billion dollars in paper.
- Switzerland aligned with the downward trend, reducing its portfolio from 300.6 billion to 284.9 billion dollars, a drop of 15.7 billion dollars.
Institutional pension funds in Northern Europe are following sovereign holders toward the exit. Dutch pension giant ABP reduced its US Treasury allocation by 10 billion euros over six months, dropping its portfolio to 19 billion euros. Denmark’s AkademikerPension liquidated its entire 100 million dollar Treasury allocation earlier in the year, announcing that it held zero US government bonds as of February. Leadership at the Danish fund stated explicitly that the divestment was driven by worsening US fiscal health and unsustainable deficit projections, abandoning the asset class entirely as a liquidity management vehicle.
Conversely, private financial centers have absorbed substantial issuance. Holdings attributed to the United Kingdom rose by 84.3 billion dollars to 939.9 billion dollars. Belgium increased its holdings by 52 billion dollars, Ireland added 43 billion dollars, Singapore bought 31 billion dollars, and Canada expanded its balance by 21 billion dollars. Supported by these inflows, overall foreign holdings of US Treasuries rose 2.3 percent year-over-year, climbing from 9.094 trillion to 9.299 trillion dollars.
Nevertheless, Norway's proposed 80 billion dollar shift highlights deepening institutional fatigue toward US debt sustainability. If the world’s leading sovereign funds and central banks continue to trim exposure, the federal government will be forced to offer elevated yields to clear auctions and finance mounting deficits. This dynamic threatens to permanently elevate borrowing costs across global markets, driving up mortgage rates and corporate financing burdens worldwide.
