Fed’s Cook Notes Orderly Bond Markets in April, Signals Rising Household Stress

Federal Reserve Governor Dr. Lisa Cook, speaking at a New York University event, observed that the U.S. economy exhibited strength in the first quarter. However, she highlighted emerging signs of strain in critical sectors, particularly housing and commercial real estate. While bond markets remained stable and functional during April’s trade-driven volatility, Dr. Cook refrained from commenting on potential risks to market stability arising from inconsistent White House policy approaches.

Household and Industry Challenges

Dr. Cook cautioned that a significant income disruption could lead to increased defaults and losses for lenders, though she did not specify the nature of such a shock. Recent Federal Reserve commentary has increasingly pointed to inflationary pressures and employment risks stemming from uneven trade policies under the Trump administration. Cook also emphasized close monitoring of commercial real estate and noted growing balance sheet pressures among low-to-moderate-income households, reflecting broader economic concerns.

Market Response

The remarks offered little new insight for investors, leaving market positions largely unchanged as the U.S. prepared for a long weekend. The U.S. Dollar Index (DXY) experienced a notable decline, falling to around 99.20, with the dollar weakening broadly against other currencies.