Norges Bank Investment Management (NBIM), manager of Norway's $2.3tn sovereign wealth fund, has proposed reducing the government bond weighting in its benchmark index from 70% to 50%. This overhaul could slash holdings of US Treasuries by about $80bn, cutting global government bond allocation by roughly $106bn. The move comes amid rising global debt levels and a bond sell-off fueled by inflation fears from the US conflict with Iran, pushing Treasury yields to multiyear highs despite interventions by Treasury Secretary Scott Bessent.

The reduction would be offset by purchasing riskier fixed-income products, primarily agency mortgage-backed securities (MBS) backed by Fannie Mae, Freddie Mac, and Ginnie Mae. NBIM argues a 50% government bond share covers liquidity needs while the remainder captures higher risk premiums. The fund's US dollar exposure would remain "essentially unchanged," falling only 0.5 percentage points.

Signed by NBIM CEO Nicolai Tangen and Norges Bank Governor Ida Wolden Bache, the letter responds to Finance Minister Jens Stoltenberg's earlier queries. Stoltenberg stated in April the fund had "no plans to reduce our exposure in the US." The proposal also increases Japanese government bond allocation by 2.8 percentage points while leaving UK gilts unchanged. The Finance Ministry will make final recommendations to parliament in spring 2027.