September 4 International Forex News

September 7, 2026

FDD-global.com

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Norway's $2.3 trillion sovereign wealth fund plans to reduce its allocation to US Treasuries by $80 billion, reallocating to non-government fixed-income assets for higher returns. The proposal, submitted by Norges Bank Investment Management, suggests lowering the weight of global government debt in its portfolio and increasing diversification. The adjustment, which would cut government debt weighting from 70% to 50%, primarily impacts US Treasuries, while keeping UK bond exposure stable and increasing investments in Japanese bonds. This decision aligns with market uncertainties, as Federal Reserve rate hike projections show mixed probabilities for increases in September and October.

Norway's Sovereign Wealth Fund Plans to Cut US Treasury Holdings by About USD 80bn

On September 4, according to the Financial Times, the manager of Norway's USD 2.3tn sovereign wealth fund has proposed adjusting its government bond portfolio to improve returns through greater allocation to other types of debt assets. Norges Bank Investment Management wrote to Norway's Ministry of Finance on Tuesday, proposing that the weighting of government debt in the fund's benchmark bond index be reduced from 70% to 50%.

The adjustment is estimated to reduce the fund's global government bond allocation by about USD 106bn, with most of the reduction coming from US Treasuries. Fixed-income assets currently account for just under 26% of the fund's overall portfolio. Norges Bank Investment Management proposed reducing the fund's exposure to US Treasuries by 12.2 percentage points, while increasing the share of US non-government fixed-income assets by 11.4 percentage points. The change is estimated to reduce the fund's US Treasury allocation by nearly USD 80bn. The fund's allocation to UK government bonds would remain unchanged, while its allocation to Japanese government bonds would increase by 2.8 percentage points.

Probability of a Federal Reserve Rate Increase in September Falls to 50%

On September 4, according to CME FedWatch, the probability that the Federal Reserve will keep interest rates unchanged through September is 49.8%, while the probability of a cumulative 25-basis-point rate increase is 50.2%. By October, the probability of unchanged rates is 35.5%, the probability of a cumulative 25-basis-point increase is 50.1%, and the probability of a cumulative 50-basis-point increase is 14.5%.

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