No.And if that happened, your bond fund will always be working on getting back to even...
Here's the specific scenario you proposed. Same as the two-year chart, rolling bond ladder, 6.2-year duration, interest rate starts at 1.3% but continues rising at 1% per year for six years instead of two. That is, ending at 7.3%.
And here is the scenario where the interest never stops rising. By the end of the chart, it is has been rising for 25 years and is now 26.3%.
It is certainly not a wonderful scenario. On the other hand, the maximum drawdown was only -9%. And Vanguard suggests that Total Bond "may be appropriate for investors with medium-term investment horizons (4 to 10 years)," and the time to get back to even from the start of the rise was about 8 years.
And this matches actual historical experience with actual bond funds, which did make money during a long period of rising interest rates. At least, according to Morningstar. Here is an actual bond fund that still exists, the Putnam Income Fund, PINCX, and Morningstar's category average for "intermediate core-plus bond funds."
From 11/1954 through 9/1981, the ten year Treasury rate
rose from to 2.66% to 15.32%
= 12.66% in 26.8 years
= an average of 0.47% per year.
During that period of time, according to Morningstar,
the average "intermediate core-plus bond fund" grew $10,000 to $36,256
= in real terms $10,370 in year-1954 dollars = real 0.14%/year annualized
--the actual Putnam Income Fund grew $10,000 to $56,548
= in real terms $16,173 in year-1954 dollars = real 1.81%/year
That means that the according to Morningstar the average fund kept up with inflation and the Putnam fund beat it.
No, it is not good when interest rates rise. But talk of permanent losses or never getting back to even are wrong, unless you are looking only at price and throwing away the coupon payments.