GILTS: Early Rally Fades

Energy swings continue to dominate from a cross-market perspective, with a move away from Tuesday/early Wednesday lows across the major benchmarks in that space weighing on core global FI markets, countering early gains in gilts. * Flash European PMI data added further pressure, while the UK equivalent wasn't as dovish as the slightly softer-than-expected headline readings suggested. * Gilt futures little changed at 85.74. * The bounce from the September 14 low appears to be a correction at this stage. However, resistance at the 20-day EMA (85.50) has been breached. The clear break suggests scope for a stronger recovery towards 86.51, a Fibonacci retracement. Key support and the bear trigger is defined at 83.72, the September 14 low. First support lies at 84.69, the September 17 low. * Yields within 1bp of yesterday's closing levels. * 10s haven't managed to cleanly break below 5.20% after piercing the level yesterday. Next downside target of note in that benchmark is located at the month-to-date low (5.118%). * 2s10s has failed to challenge the March low (34.84bp) during the recent flattening. * Meanwhile, 5s30s has registered a fresh cycle low in recent sessions (82.40bp) before