Sep 9, 2026 · 16 min · 5 segments
On this week's Macrodose, James Meadway looks at how the world’s largest sovereign wealth fund is cutting its holdings of US government debt (0.36), John Healey’s first major speech as Chancellor of…
Our first story this week is the news that the world's largest sovereign wealth fund is moving to significantly cut its holdings of US government debt.
Norway's government pension fund Global is managed by Norges Bank Investment Management, with assets worth $2.3 trillion.
The move by the fund was widely reported, coming on the back of turmoil in bond markets over the last few weeks, now stretching into months, which has seen traders across the globe significantly less keen on holding the government debt of some large developed countries.
Britain is very much one of them, France, Italy, the US most dramatically, even Switzerland has been caught up in all of this.
The decision taken by the Norwegian Fund wasn't specifically targeting US government bonds, but it lands in a context where there's already been very pronounced pressure on US government borrowing costs because bond traders are less keen than they were to hold US treasury bills, the financial instruments the government issues when it borrows money.
At the minute, that borrowing is running at close to $2 trillion a year, against a total debt the US government has built up over time of an extraordinary $40 trillion, a landmark reached in mid to late August, and of some psychological importance, if perhaps not too much else.
So what's actually happening here? It's not so much that the Norwegian fund is choosing to target US government bonds specifically, although the fact that NBIM has recommended reducing the government bond share risk benchmark bond index from 70% down to 50% means US holdings drop by a very significant amount.
The changes would cut US Treasury exposure within that index from 34% to 22%, equivalent to around $80 billion of the fund's roughly $215 billion in US Treasuries.
Having made that decision across the board, it has an impact on what's happening in the market anyway.
It's both an indicator of stress in the market and something that reinforces that stress, which the fund itself is very keen to play down.
The proposal was set out in a letter to Norway's finance ministry on 1st September and hasn't yet been implemented.
NBIM is awaiting the ministry's response and says any changes would be phased in gradually, so it isn't simply dumping debt back onto the market and causing crashing prices and further problems for the US.
That will all rumble on and it's the reason for this sort of controlled explosion.
If you look at the letter and the surrounding commentary, NBIM's chief executive, Nikolai Tangeri, has been pointed to stress tests the fund ran earlier this year modelling an AI correction, a scenario in which the AI boom fails to produce real productivity gains, equities fall sharply, and the fund could lose roughly 35% of its value, on the order of $700 billion.
The fund's official reasoning for the bond shake-up is framed more narrowly as a search for better returns and diversification away from government debt into higher-yielding corporate and mortgage-backed securities.
But the AI stress test finding has been widely reported as the backdrop driving the decision.
By the way, they're trying to reduce what they see as risk in their portfolio, including their holdings of government debt, US and otherwise, because of the risk they think an AI bubble bursting poses to sovereign debt more broadly.
The second point, which has also been reported but not quite as much, is that the Dutch central bank, the DNB, has moved gold out of vaults in New York and Ottawa, about 86 tonnes of it, relocating it to the Bank of England in London between March and August this year, citing, I quote, increasing geopolitical unrest and a need to strengthen, quote, crisis preparedness.
The move follows the Bank of France's decision to replace 129 tonnes of gold held at the New York Fed with bullion bought in Europe.
This is, of course, something that's been happening quite strikingly in the last few years, an increased holding of gold by central banks, and it's been one of the drivers of the soaring price over those last few years.
That's come primarily from the global south, led by China, but you can also look at holdings in Russia and many other places around the world where there's been a deliberate effort to get out of steadily holding US treasuries over time and into things that look a lot more like physical assets, including, most obviously, gold.
And not just certificates saying gold is held somewhere in the world, but actual physical holdings.
Our first story this week is the news that the world's largest sovereign wealth fund is moving to significantly cut its holdings of US government debt.
Norway's government pension fund Global is managed by Norges Bank Investment Management, with assets worth $2.3 trillion.
The move by the fund was widely reported, coming on the back of turmoil in bond markets over the last few weeks, now stretching into months, which has seen traders across the globe significantly less keen on holding the government debt of some large developed countries.
Britain is very much one of them, France, Italy, the US most dramatically, even Switzerland has been caught up in all of this.
The decision taken by the Norwegian Fund wasn't specifically targeting US government bonds, but it lands in a context where there's already been very pronounced pressure on US government borrowing costs because bond traders are less keen than they were to hold US treasury bills, the financial instruments the government issues when it borrows money.
At the minute, that borrowing is running at close to $2 trillion a year, against a total debt the US government has built up over time of an extraordinary $40 trillion, a landmark reached in mid to late August, and of some psychological importance, if perhaps not too much else.
So what's actually happening here? It's not so much that the Norwegian fund is choosing to target US government bonds specifically, although the fact that NBIM has recommended reducing the government bond share risk benchmark bond index from 70% down to 50% means US holdings drop by a very significant amount.
The changes would cut US Treasury exposure within that index from 34% to 22%, equivalent to around $80 billion of the fund's roughly $215 billion in US Treasuries.
Having made that decision across the board, it has an impact on what's happening in the market anyway.
It's both an indicator of stress in the market and something that reinforces that stress, which the fund itself is very keen to play down.
The proposal was set out in a letter to Norway's finance ministry on 1st September and hasn't yet been implemented.
NBIM is awaiting the ministry's response and says any changes would be phased in gradually, so it isn't simply dumping debt back onto the market and causing crashing prices and further problems for the US.
That will all rumble on and it's the reason for this sort of controlled explosion.
If you look at the letter and the surrounding commentary, NBIM's chief executive, Nikolai Tangeri, has been pointed to stress tests the fund ran earlier this year modelling an AI correction, a scenario in which the AI boom fails to produce real productivity gains, equities fall sharply, and the fund could lose roughly 35% of its value, on the order of $700 billion.
The fund's official reasoning for the bond shake-up is framed more narrowly as a search for better returns and diversification away from government debt into higher-yielding corporate and mortgage-backed securities.
But the AI stress test finding has been widely reported as the backdrop driving the decision.
By the way, they're trying to reduce what they see as risk in their portfolio, including their holdings of government debt, US and otherwise, because of the risk they think an AI bubble bursting poses to sovereign debt more broadly.
The second point, which has also been reported but not quite as much, is that the Dutch central bank, the DNB, has moved gold out of vaults in New York and Ottawa, about 86 tonnes of it, relocating it to the Bank of England in London between March and August this year, citing, I quote, increasing geopolitical unrest and a need to strengthen, quote, crisis preparedness.
The move follows the Bank of France's decision to replace 129 tonnes of gold held at the New York Fed with bullion bought in Europe.
This is, of course, something that's been happening quite strikingly in the last few years, an increased holding of gold by central banks, and it's been one of the drivers of the soaring price over those last few years.
That's come primarily from the global south, led by China, but you can also look at holdings in Russia and many other places around the world where there's been a deliberate effort to get out of steadily holding US treasuries over time and into things that look a lot more like physical assets, including, most obviously, gold.
And not just certificates saying gold is held somewhere in the world, but actual physical holdings.
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