NEW YORK (CNNMoney.com) - Bond prices slipped Thursday after investors bailed on the safe-haven investment and instead opted for stocks, which rallied for the second straight session.

The dollar weakened against the euro and the yen.

The benchmark 10-year note fell 8/32 to 100-12/32 to yield 5.07 percent, up from 5.04 percent from Wednesday.

The 30-year bond slipped 17/32 to 89-26/32, yielding 5.17, up from 5.13 the previous session. Bond prices and yields move in opposite directions.

The five-year note fell 4/32 to yield 4.97, while the two-year note edged lower to yield 4.97.

Though they were little changed earlier in the session after the morning's economic reports, Treasurys fell after stocks took off during the afternoon.

"The slow-growth economy story is joined at the hip with the trend in stocks," Chris Rupkey, senior financial economist at Bank of Tokyo/Mitsubishi, in New York told Reuters.

"The smart rebound in the stock market on Thursday afternoon led to some selling in the Treasury market as the money that made its way out of equity markets and into bonds last week reverses course."

Bond traders sought guidance in a number of economic reports earlier in the day including a reading on the gross domestic product in the first quarter, which grew faster than originally thought in the first quarter, even though it fell short of Wall Street expectations. (Full story)

Within the preliminary GDP figures, the Fed's favorite measure of inflation -- the year-on-year personal consumption expenditures index, excluding food and energy prices -- was unchanged from an initial first quarter reading of an increase of 2.0 percent. The Fed's presumed comfort level for core inflation is 1-2 percent, according to Reuters.

Bond investors fear inflation since it erodes the value of the fixed-income investment.

Federal Reserve Chairman Ben Bernanke also reaffirmed his commitment to fighting inflation in a letter made public Thursday, stating that long-term inflation expectations appear to be well contained.

The government reported that April's existing home sales figure declined 2 percent, roughly falling in line with expectations.

But Thursday's reports did not affect the market's view that there was more than an even chance that the central bank would raise rates in June, Reuters reported.

Investors have been scrutinizing the latest economic data in an effort to gauge whether the Federal Reserve will take a break from its rate hike campaign when it meets in June.

Probably the biggest number investors will be watching is this Friday's personal income and consumption index for April, which includes a favored measure of inflation, the core PCE.

"The data don't come any bigger than the core PCE ... and this report will be the last one the Fed gets before voting thumbs up or down on a rate hike in June, so the data take on even more importance than usual," Rupkey told the news service.

In currency trading, the euro bought $1.2790, up from $1.2778 late in New York Tuesday. The dollar bought ¥111.83, down from ¥112.66 the previous session.

--from staff and wire reports

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