The spread of the coronavirus across mainland China, and internationally, continues to take up space in markets. More than 60,000 cases of the coronavirus have been confirmed in China with more than 1,300 deaths associated with the virus in the country. There have been 15 confirmed cases in the United States.

That has caused the 10-year Treasury note yield to stay low. Earlier this week the 10-year yield started at 1.54% and climbed above 1.6% before settling in at 1.61% to close trading Thursday. 

The most significant economic impact is being felt in China, but in the United States the Federal Reserve is keeping an eye on the spread of the virus. There was no change to rates this month but Federal Reserve Chairman Jerome Powell said they are monitoring the situation, calling it a "major unknown" for the economy at this point.

Powell did have a warning this week for U.S. lawmakers with regard to rates and debt. He is concerned about the federal budget deficit, which is expected to go over $1 trillion this year. If there is a true downturn, Powell's concern is that the Fed will have no room to cut. Right now the benchmark rate is at 1.75%. In year's past, rates were hovering around 5% when a downturn hit, allowing wiggle room. 

"Putting the federal budget on a sustainable path when the economy is strong would help ensure that policymakers have the space to use fiscal policy to assist in stabilizing the economy during a downturn," said Powell during testimony on Tuesday to the House Financial Services Committee. 

The latest budget proposal from President Trump would add another $5 trillion to the federal debt during the next 10 years. Trump's presidency has already seen an increase of about $3 trillion. He is adamant that the Fed currently has interest rates set too high. 

Consumers continue to drive the U.S. economy in this 11th year of expansion. The labor market is strong and wages are going up with inflation pressures remaining low. That has given consumers a lot of buying power especially when it comes to home loans.

The latest report from the Mortgage Bankers Association shows that during the past 11 years, January 2020 has been the strongest for purchase mortgage applications. Not only that, the MBA's Chief Economist Joel Kan says that refinances are also booming. So far in 2020, the Refinance Index has gone up by 5% to its highest level since June 2013. Year-over-year, that number is 207% higher.

Interest rate averages did tick slightly higher this week with Freddie Mac's 30-year fixed-rate mortgage average showing 3.47% (blue line).  

This early buying season for 2020 piggybacks off the incredible end to 2019. The Federal Reserve Bank of New York's data shows that Q4 2019 was the biggest lending quarter in 14 years, to the tune of more than $750 billion in new mortgages originated in the last three months of 2019. 

Overall estimates show that 2019 was worth $2.1 trillion in origination volume. That's well above the MBAs original prediction of $2.07 trillion, which would have been a 12-year high on its own.