Outgoing Federal Reserve Chairman Janet Yellen holds a press conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, US, December 13, 2017.
Jonathan Ernst | Reuters
Treasury Secretary Janet Yellen told CNBC on Thursday that there may be areas of the US stock market where investors should be cautious.
In an interview aired on “Closing Bell,” Yellen said she believes higher stock valuations are understandable given the Federal Reserve’s accommodative monetary policy.
“Well, in part we are in a very low interest rate environment,” Yellen said. “And while valuations are very high, in a world of very low interest rates, price gains and tight multiples are often high. That said, there may be sectors… where we need to be very careful,” Yellen added. , who took over the position of Treasury Chief under President Joe Biden in late January.
The comments came in response to a question from CNBC’s Sara Eisen, who asked if Yellen felt it made sense for the major US stock indices to trade near record highs during the coronavirus pandemic and related economic damage. She also asked about movements in the large share of IPOs and SPACs.
Yellen did not specify which sectors she referred to.
Bitcoin has also seen a major move in recent months, and the world’s most valuable cryptocurrency broke above USD 52,000 for the first time on Wednesday.
Yellen said she views bitcoin as a “highly speculative asset” and noted that it has seen a high degree of volatility in recent years. When asked if she thinks it should be regulated, Yellen said any action should be about protecting investors.
“I think it’s important to make sure it’s not used as a means of triggering transactions and that there is investor protection,” said Yellen, a former Fed chairman. “And so regulating institutions that trade in Bitcoin and ensuring that they adhere to their regulatory responsibilities is certainly important to me.”
Cryptocurrencies have generally gained widespread adoption from established financial firms in recent times. Mastercard said last week that it plans to support certain cryptocurrencies on its formal network, while BNY Mellon, the country’s oldest bank, will launch a digital asset unit later this year.