US Dollar Surges as State Money Flocks to Record Treasury Deployments

The US Treasury yield has reached its highest level in three years, while central banks have bought a record amount of gold. Both trends suggest that state money is shifting towards the dollar and away from traditional safe-haven assets.

Gulf sovereign funds have deployed a record $53.9 billion across 108 deals in the first half of 2026, with nearly half of it going into US markets. This represents a significant increase from last year, when sovereign funds collectively parked $132 billion in America while emerging markets drew only 15% of that capital.

Norges Bank Investment Management, the world's largest sovereign fund at $2.3 trillion, has reduced its holding of US Treasuries by roughly $80 billion and rotated into Japanese government bonds and agency mortgage-backed securities. Central banks have also bought a record 289 tonnes of gold in the second quarter, up 62% from the prior quarter.

This shift is not driven by a bet against America, but rather a hedge against being trapped like Russia's central bank was in 2022. The change in creditors and the pressure they exert on Washington could have significant implications for the country's ability to finance itself.