Bond markets may face prolonged rout as RBI pauses its rate-cut spree

It’s starting to look like India’s sovereign bond market is on the brink of a prolonged rout.

Traders have shied away from the long-end of the curve since July on concern the government will expand record bond sales. Sentiment toward the short-end, which closely tracks policy rates, turned negative Thursday after the central bank surprised by holding off on easing.

The decision by the Reserve Bank of India spurred speculation that it has run out of ammunition after slashing rates five times this year. Hopes that the central bank would announce plans to buy bonds were also dashed. Yields on