NEW YORK (CNNMoney.com) -- Bonds slipped and the dollar rose Tuesday after investors took a key reading on inflation to mean the Federal Reserve may raise interest rates yet again.

The benchmark 10-year note fell 8/32, or $2.50 on a $1,000 note, to yield 5.01 percent, up from 4.99 percent late Monday.

The 30-year bond lost 14/32 to yield 5.10, up from 5.07 percent late Monday. Bond prices and yields move in opposite directions.

The five-year note fell 4/32 to yield 4.94 percent, while the two-year note slipped 2/32 to yield 5 percent.

The Commerce Department said core consumer prices, which exclude food and energy and are a key inflation measure, rose 0.2 percent in June.

Although the number was in-line with estimates, it brought the increase in prices to 2.4 percent for the trailing 12 months, which is the fastest pace since September 2002 and is far higher than the Fed's comfort range of 1 to 2 percent.

The likelihood the Fed will raise its key funds rate at its next meeting went from 36 percent Monday to 46 percent after the report Tuesday, according to futures markets.

Inflation is bad for bonds as it hurts the value of the fixed interest-paying investment.

But it's good for the dollar, as higher interest rates make dollar-denominated investments more attractive, and the greenback rose against the euro and the yen.

The euro bought $1.2762 Tuesday, down from $1.2774 late Monday. The dollar bought ¥114.95, up from ¥114.65 the previous session.

Fed's Poole undecided on need for rate hike