Bonds Shift

Bonds Shift

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  • Saudi Arabia's ownership of US Treasury bonds has hit a more than 6-year low, reflecting a shift towards riskier investments and a decrease in reliance on such assets. Recent US Treasury data indicates the Kingdom's consistent divestment in Treasury bonds, selling over $3 billion in June alone, marking the third consecutive month of reduction. This trend brought Saudi Arabia's ownership down to $108.1 billion. Neighboring UAE also exited treasury bonds worth approximately $4 billion.
  • Amid a global movement to challenge the dominance of the US dollar, oil-producing Arab Gulf countries are exploring alternative investment avenues to attain higher returns. Saudi Arabia's strategic shift involves a notable reduction of over 41% in its treasury bond holdings since early 2020. Instead, the Kingdom is increasingly directing its focus and resources towards investments in ventures like the Lucid Group, Uber, and even the English football club Newcastle United.

Why it matters

This highlights a significant transformation in the investment strategies of Saudi Arabia and other Gulf nations. The move away from US Treasury bonds toward riskier assets underscores their efforts to diversify their portfolios and pursue potentially higher yields and reflects alternative avenues to leverage their oil-earned wealth.


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