Growing concerns over soaring government debt, rising bond yields and geopolitical uncertainty are prompting some of the world’s biggest institutional investors and central banks to rethink their exposure to US assets, with Norway’s sovereign wealth fund planning to reduce its holdings of US Treasurys and the Dutch central bank moving a huge portion of its gold reserves from North America to London, according to CNBC.
The moves come as global government bond markets face renewed pressure, with yields on several major sovereign bonds climbing to multi-decade highs amid concerns over inflation, interest rates and mounting public debt.
Norway’s $2.3 trillion sovereign wealth fund, the world’s largest, has proposed a major restructuring of its fixed-income portfolio, CNBC reported. Norges Bank Investment Management (NBIM), which manages the Government Pension Fund Global, has recommended reducing the share of government bonds within its bond benchmark from 70% to 50%.
The fund said the lower allocation would still provide sufficient liquidity during periods of market turbulence while allowing it to pursue higher returns through other fixed-income assets.
Under the proposed changes, NBIM’s US Treasury holdings would fall from 34.1% of its government bond portfolio to 21.9%, while its euro area holdings would decline from 16.8% to 14.1%.
The proposed reduction in Treasury exposure comes at a sensitive time for the US bond market. Long-term Treasury yields have recently risen to decade-high levels as investors have become increasingly concerned about the trajectory of US government finances and the country’s rapidly expanding debt.
Economist Mohamed El-Erian said the Norwegian fund’s planned reduction was relatively small in terms of its direct impact on the Treasury market, but significant as a signal.
“The size isn’t big, but the signal that traditional holders and buyers are becoming less reliable is a very important one,” El-Erian told CNBC, pointing to Japan, China and Gulf countries as other major holders facing pressures that could affect their appetite for US government debt.
He argued that the recent rise in interest rates was driven less by concerns about inflation or the credibility of the Federal Reserve than by a fundamental imbalance between the enormous amount of debt being issued and the pool of reliable buyers willing to absorb it.
“China, for geopolitical purposes, is no longer as willing,” El-Erian said. “Japan and the Gulf countries have domestic issues.”
Norway’s fund is simultaneously seeking greater diversification within its fixed-income portfolio. NBIM plans to increase its holdings of nongovernment US fixed income, including corporate bonds, from 16.2% to 27.6%.
Fund chief executive Nicolai Tangen and Norges Bank Governor Ida Wolden Bache said the fund could earn higher premiums by moving into riskier assets such as mortgage-backed securities. Such securities, they argued, can behave differently from equities during periods of market stress and could therefore provide an additional source of diversification and reduce overall portfolio volatility.
The strategy reflects growing concerns over concentration risk. NBIM currently holds around $1.65 trillion in equities, representing almost 1.5% of all listed shares globally, alongside about $592 billion in fixed-income assets.
The fund has posted record profits in recent quarters, benefiting from its enormous investments in US and Asian technology companies and stocks linked to the artificial intelligence boom. But Tangen has warned that such returns cannot be expected to continue indefinitely, particularly if global markets experience a major correction.
A recent NBIM stress test found that a sharp correction in AI-related assets could wipe about $740 billion, or 35%, from the fund’s value.
El-Erian said investors should meanwhile expect pressure on global government bonds to persist, particularly because there is little political appetite in the United States for immediate fiscal consolidation. “I don’t see any appetite in the US for immediate fiscal consolidation. So I suspect we will continue to see upward pressures on yields,” he said.
He identified Britain, Japan and France as three G7 economies particularly vulnerable to sovereign debt problems. Britain, he said, was especially sensitive to movements in US yields, with its borrowing costs tending to move by considerably more when US rates change.
At the same time, El-Erian criticised what he described as excessive attempts by the US administration to influence financial markets and monetary policy.
The Treasury Department recently announced plans to at least double the size of its long-dated Treasury buybacks after a surge in borrowing costs. Vice President JD Vance has also called on the Federal Reserve to lower interest rates, adding to political pressure on the central bank.
El-Erian described the moves as “unfortunate”, warning that the Treasury could not permanently impose desired outcomes on a market as large as the US bond market without risking unintended consequences.
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The concerns over US assets are also reflected in central banks’ management of their gold reserves.
The Dutch central bank, DNB, said it had transferred approximately 86 metric tons of gold from storage facilities in New York and Ottawa to London between March and August, according to CNBC. The amount represented just over one-quarter of its gold reserves previously held in North America.
The gold is now stored with the Bank of England, which DNB said offered access to the world’s most easily tradable gold because bars stored there meet international trading standards.
DNB said the move was aimed at strengthening its contingency planning and crisis preparedness amid increasing geopolitical unrest. “With this relocation, we have improved the tradability of our gold reserves,” DNB Governor Olaf Sleijpen said, adding that the central bank expected never to need to use the reserves in a crisis but wanted to strengthen its resilience.
The transfer gives DNB a more geographically balanced distribution of its gold. London now holds 32.1% of its reserves, while 30.8% is stored at the central bank’s cash centre in Zeist in the Netherlands. New York and Ottawa each hold 18.5%.
DNB said gold stored in the US and Canada could not be utilised as quickly and directly in a crisis, while London’s established gold market infrastructure offered greater tradability.
The Dutch move follows a similar decision by the French central bank, which transferred 129 metric tons of gold from the New York Federal Reserve between July 2025 and January 2026. French central bank Governor François Villeroy de Galhau said the transfer was not politically motivated.
The moves by Norway and the Netherlands come as gold prices have surged amid heightened financial and geopolitical uncertainty. Gold has gained nearly 25% over the past 12 months and was recently trading around $4,430 an ounce.
Taken together, these moves suggest that the world’s largest investors are beginning a gradual, rather than abrupt, retreat from US markets, according to analysts. Rising debt, higher yields, geopolitical tensions and policy uncertainty are encouraging institutions to reduce their reliance on US Treasurys and dollar-linked assets.
While the shift does not amount to a wholesale abandonment of US markets, it signals that their once-dominant position in global portfolios can no longer be taken for granted.Latest News, Breaking News & Top News Stories | The Express TribuneWeb DeskRead More