Norway's sovereign wealth fund intends to cut its US government bond holdings by $80 billion as global investors express growing concern over rising US national debt.

Norway's sovereign wealth fund, which held approximately $215 billion in US government bonds at the end of June, plans to reduce its position by $80 billion. This move comes as the US national debt surpassed $40 trillion in August, leading to increased scrutiny from global investors. Yields on 30-year US Treasury bonds recently reached nearly 5.4%, marking their highest level since 2007.

Rising Debt and Interest Costs

The US now spends over $1 trillion annually on interest payments, exceeding its total military budget. According to the Federal Reserve Bank of St. Louis, the national debt has increased by approximately 650% over the last 30 years, rising from $5.2 trillion in 1996 to its current level. Treasury Secretary Scott Bessent has aimed to halve the projected 6% budget deficit for 2026, though analysts note this goal faces challenges from military costs and revenue shortfalls.

Market Competition and Investor Sentiment

Investors are increasingly looking toward corporate debt as an alternative to government bonds. Major technology companies, often referred to as 'hyperscalers,' have raised over $800 billion in debt this year to fund AI infrastructure, creating competition for US Treasuries. While analysts suggest the US is unlikely to default, they warn that the current fiscal trajectory could undermine confidence in the dollar and increase pressure on bond yields.