India bond traders were caught off guard by hawkish Reserve Bank of India minutes released Wednesday, showing growing inclination toward tighter policy as members worry about inflation risks. This came days after RBI chief Sanjay Malhotra said inflation remains manageable, reinforcing expectations of steady borrowing costs.

The contradictory messaging spurred a bond selloff Thursday. Traders were already reeling from RBI's sudden decision to end a special incentive for foreign-currency deposit scheme a month early. The events raise questions over RBI's communication with markets.

Globally, bonds in Japan, Australia, and New Zealand fell Friday after US Treasuries gave up gains from increased buybacks. In Indian stocks, the Nifty 50 snapped a seven-session losing streak Thursday but heads for a second weekly decline.

The new auction-based share price discovery system remains in focus after the securities regulator's interim order against a JPMorgan unit. As inflows from the foreign-currency deposit scheme fade, yields could drift higher.