Created by too many years of the Federal Reserve's easy money policies, bubbles in bonds, commercial real estate and parts of the stock market could soon pop, former Wells Fargo Chairman and CEO Richard Kovacevich said Monday.

"That's what happened in the high-yield market," he said on CNBC's "Squawk Box."

The junk bond market, mirrored by the iShares iBoxx $ High Yield Corporate ETF, accelerated to the downside in late 2015, for overall losses in the past 12 months of about 10 percent.

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As for the stock market, Kovacevich predicted flat returns to up 5 percent for 2016. "As long as we have relatively slow economic growth in the 2 to 2.5 percent [range], I don't see any reason for the market to do much, if at all."

He said he felt stocks were fully valued 1½ years ago.

Kovacevich predicted that the Fed will continue to normalize monetary policy. "They're too slow with that. At least they made one step. But they have to get out of reinvesting their $4 trillion portfolio."

"They have to gradually increase interest rates, hopefully about four times this year and eventually get to 2 percent by sometime in the middle of next year," he added.