Manager of Norway’s $2tn oil fund proposes slashing US Treasury holdings

The manager of Norway’s $2tn oil fund has proposed reducing the fund’s holdings of US Treasuries, according to the Financial Times. The recommendation was directed to Norway’s Ministry of Finance as part of a broader review of the fund’s bond positions, with the stated aim of improving returns. The report does not specify how much of the Treasury portfolio would be sold or when any changes would take effect.

Norway’s sovereign wealth fund is one of the largest pools of institutional capital in global markets, so changes to its strategic allocation can attract attention beyond the fund itself. The proposal comes as policymakers and investors continue to assess the role of US government debt in large international portfolios. The latest report describes a suggested overhaul rather than a completed decision, making it different from an announced reduction in Treasury holdings.

The immediate link to the US Treasury market is through demand for government bonds. A reduction in the fund’s allocation could mean less marginal demand for Treasuries if the Ministry of Finance approves the recommendation and the fund implements it. The corresponding capital could instead be directed toward other bond markets or instruments, but the report does not identify the destination or provide a proposed allocation split.

The proposal remains subject to government review, and the size and timing of any change are uncertain. There is no stated evidence in the supplied report that Norway has begun selling Treasuries, nor does it establish that other sovereign funds will follow the same approach. The fund’s objective of improving returns also leaves open whether the change reflects a view on US fiscal conditions, relative bond valuations, portfolio diversification, or another consideration.

The next decisive step is the Ministry of Finance’s response to the recommendation. Market participants would need the ministry’s decision, the fund’s revised strategic benchmark, and the size and implementation schedule of any Treasury reduction to assess the likely effect on demand. Until those details are published, the report establishes a potential shift in a major holder’s policy rather than a quantified flow into or out of the Treasury market.