Rising yields reshape debt fund landscape after geopolitical tensions spike bond markets.

Rising yields reshape debt fund landscape after geopolitical tensions spike bond markets. The 10-year government securities yield surged from 6.68% to 7.1% following US-Iran conflict, pushing long-duration debt mutual funds into negative territory with average losses of 1.11%. These interest rate-sensitive funds face mark-to-market pressures as yields climb. However, fund managers identify selective opportunities at the long end of the yield curve, where 30-40 year yields sit 250 basis points above repo rates. The steep curve presents potential entry points for investors, though timing remains uncertain amid persistent geopolitical tensions. Experts suggest waiting for yields to reach 7.25% on 10-year government securities before making tactical allocations, as the RBI's rate cut cycle appears exhausted and future policy changes may lean toward hikes rather than cuts.