Global Investors Trim US Exposure Amid Rising Debt Fears

Global investors and central banks are trimming their exposure to US assets amid growing concerns over soaring government debt, rising bond yields, and geopolitical uncertainty.

Norway's $2.3 trillion sovereign wealth fund is planning to reduce its holdings of US Treasurys from 34.1% of its government bond portfolio to 21.9%, according to CNBC. The fund is also seeking greater diversification within its fixed-income portfolio, increasing its holdings of non-government US fixed income, including corporate bonds.

The Dutch central bank has moved approximately 86 metric tons of gold from storage facilities in New York and Ottawa to London between March and August, with the Bank of England now holding just over one-quarter of its gold reserves previously held in North America.

Economist Mohamed El-Erian said the Norwegian fund's planned reduction was relatively small but significant as a signal that traditional holders and buyers are becoming less reliable. He argued that the recent rise in interest rates was driven by a fundamental imbalance between the enormous amount of debt being issued and the pool of reliable buyers willing to absorb it.

The moves come at a sensitive time for the US bond market, with long-term Treasury yields rising to decade-high levels amid concerns over inflation, interest rates, and mounting public debt. El-Erian criticized what he described as excessive attempts by the US administration to influence financial markets and monetary policy.