Slightly Weaker Start Despite NYCB Downgrade. Auction in Focus

After rising roughly 2bps yesterday afternoon, bond yields dropped just over 2bps right at the start of the overnight session with buzz surrounding Moody's downgrade of NYCB.  The energy behind the rally was tepid, at best, which may have been our first clue that overnight trading makes no guarantees. NYCB would go on to rally sharply in pre-market trading with traders ostensibly focusing on a leadership change as well as comments regarding an absence of big withdrawal flows.  With that, the fuel for the overnight bond rally evaporated and bonds pushed modestly into weaker territory.  From here, the focus is on the 1pm auction of 10yr Treasuries--the largest ever.