EGBS: Yields Off Session Lows Following Hawkish PMIs, Energy Recovery

German yields have moved away from session lows, a combination of hawkish flash PMIs and a small recovery in energy benchmarks. The curve has twist flattened, with Schatz yields up 2bps to 3.244%. If next week's Eurozone flash September inflation readings surprise meaningfully to the upside, it could bring an ECB October hike back into play (currently ~55% priced). * The Eurozone-wide September flash PMI confirms another solid month of activity, extending resilience in the face of the US-Iran war energy shock. Both services and manufacturing components contributed, though the former was the main upside surprise versus consensus. Taken alongside hawkish developments inflation components, there is little to push back on the hawkish rhetoric employed at the ECB's September decision. * 10-year yields are now little changed on the session at 3.464%, off last week's highs of 3.573%. * Germany held a LT Bund auction this morning, selling E1bln of the 3.40% May-47 Bund and E1bln of the 2.90% Aug-56 Bund. * In futures, volumes in Bobl (over 300k cumulative) stand out relative to the rest of the curve. For context, cumulative volumes in Bund are ~320k. * 10-year EGB spreads to Bunds are slig