Deutsche Bank believes that a proposed adjustment to the investment strategy of Norway's $2.2 trillion sovereign wealth fund could lead to a substantial increase in its allocation to Japanese government bonds.

“While the amounts involved are relatively small relative to the size of the global fixed income market, we believe that, as one of the world's largest and most successful sovereign wealth funds, the shift in its investment strategy is a strong indication that current global capital flows and portfolio allocations are undergoing a slow but steady transformation,” analysts Shreyas Gopal and George Saravelos wrote in a report.

Norway now acknowledges that sovereign debt is no longer a risk-free asset, and it is shifting its US fixed income allocation from Treasuries into non-sovereign fixed income assets. The Norwegian sovereign wealth fund is also making a significant pivot toward Japanese government bonds, thereby “recognizing the scale of that market and reducing the importance of debt-to-GDP ratios as a metric for market allocation.”

This tilt in allocation means that the countries and currencies set to benefit the most include Japan and the yen.