Fed’s Cook Warns of Potential Asset Price Declines Amid Elevated Valuations

Federal Reserve Governor Lisa Cook issued a cautionary note on Thursday, highlighting the risk of significant pullbacks in overvalued asset classes including stocks, bonds, Leveraged loans, and real estate. While such declines could be sharp, Cook downplayed systemic financial risks, stating they would likely fall short of the damage inflicted during the 2008 crisis.

Private credit expansion, hedge fund Treasury exposures, and AI-driven trading emerged as additional concerns in Cook's Georgetown University remarks. The Fed governor framed technological innovation as a double-edged sword—potentially stabilizing if properly supervised, yet demanding careful regulatory navigation.

Markets await clearer signals on monetary policy as the FOMC prepares for its December 9-10 meeting. No direct references to cryptocurrencies appeared in Cook's address, leaving digital asset implications open to interpretation amid broader financial stability discussions.