Bonds have been on a roll lately, with the 10-year Treasury yield dropping to a 14-month low.

But the exploding budget deficit and government debt burden will ultimately push inflation and interest rates higher, putting investors in bond mutual funds at risk, experts say.

Some predict the Federal Reserve will start raising rates during the first half of next year. Meanwhile, the Treasury will have to issue more and more debt to finance the deficit – estimated at $1.6 trillion for this year.

Now is the time to begin adjusting your bond fund portfolio in preparation for higher rates and inflation, Payson Swaffield, head of fixed income at Eaton Vance Investment Management, told the Wall Street Journal.

"You don't want to be late."

Possibilities include floating rate funds, foreign bond funds and intermediate-term bond funds, the Journal says.

The floating rate funds now yields about 4 percent. And yields move in synch with market rates, so you won’t get hurt by rising interest rates.

Foreign bonds can rise when U.S. bonds fall. Intermediate-term bond prices fall less than long-term bonds when rates rise.

Pimco money manager Anthony Crescenzi also is worried about Treasuries, because the recent rally has created a flattening yield curve. That curve measures the difference between short- and long-term rates.

What does the flattening mean?

“Investors have become less optimistic about the outlook for both the U.S. and global economy,” Crescenzi wrote in a note to investors.