(Reuters) -Federal Reserve Governor Lisa Cook on Friday noted financial market volatility last month driven by the Trump administration's announcement of unexpectedly high tariffs did not result in the kind of U.S. market dysfunction triggered by the COVID-19 pandemic, but added that the experience would help "hone our ongoing assessment" of the stability of the financial system.

Treasury markets functioned in "an orderly fashion" despite a decline in liquidity as investors rushed to sell U.S. debt, and corporate debt markets were not overly stressed, Cook said in remarks prepared for delivery to the Seventh Annual Women in Macro Conference, co-sponsored by New York University's Graduate School of Arts and Science and its business school, as well as the University of Chicago's Becker Friedman Institute for Economics.

"The episode provided a real-life example of the large asset-price declines and sudden bursts of volatility that can result from shocks when asset valuations are stretched, as well as the importance of stable and resilient funding markets in absorbing shocks," Cook said, in remarks that did not touch on monetary policy.

Corporate earnings calls and the Fed's own market outreach suggested businesses and market participants were concerned by heightened uncertainty, an increased risk of an economic slowdown, and prospects for higher inflation, she said, though since mid-April "some of this uncertainty has ebbed." 

Cook said that overall it is encouraging that both households and businesses are in "solid shape." Still, she said, low- and moderate-income households are under some stress, and a "sufficiently large income shock could strain the debt-servicing capacity of a broader group of households," pushing up defaults and creating more substantial losses for lenders.

She noted that house price increases have slowed since spiking after the pandemic, and said she continues to watch the commercial real estate market closely, given that a large portion of those loans will soon need to be refinanced at what are now higher rates.