NEW YORK (CNN/Money) - Bond prices rose higher Tuesday following a decision by the Federal Reserve to raise the federal funds rate by a quarter percentage point to 3.50 percent as expected, but hinted that its streak of rate hikes may be coming to a close.

The dollar lost steam against the yen and euro.

The benchmark 10-year note rose 7/32 to 97-27/32, to yield 4.40 percent, down from 4.43 Monday. The 30-year bond gained 13/32 to 111-30/32, to yield 4.58 percent, down from 4.60 in the previous session. Treasury prices and yields move in opposite directions.

In shorter-term debt, the five-year note climbed 5/32 to yield 4.25 percent. The two-year note was up two ticks, yielding 4.12 percent. Yields on the two-year note haven't crossed the 4 percent mark in more than four years.

The Fed has raised interest rates ten times since June 2004 in quarter-percentage point increments, bringing the benchmark Fed funds rate to 3.5 percent from a four-decade low of 1 percent.

Recent data indicating growing strength within the economy bolstered speculation that the central bank would increase rates at a quarter-percentage point pace. (Full story.)

Before the Fed meeting, the Labor Department announced Tuesday morning that unit labor costs, an important measure of inflation in the job market, climbed 1.3 percent in the second quarter. Economists expected a 2.75 percent result.

Productivity also climbed 2.2 percent during the second quarter, ahead of economists' expectations of 2 percent.

In currency trading, rising interest rates generally help the dollar as they make dollar-denominated securities more attractive to foreign investors, but the dollar only rallied briefly following the announcement before retreating.

The dollar bought ¥111.98, down from ¥112.12 late Monday, while the euro bought $1.2373, up from $1.2351 in the previous session.

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