Bonds tumble as stocks rally

NEW YORK (CNNMoney.com) -- Treasury prices dipped Friday as U.S. stocks waded into record territory after investors became optimistic on corporate merger news.

The dollar fell against the euro and the yen.

The benchmark 10-year note tumbled 13/32, or $4.06 on a $1,000 bond, to yield 4.81 percent, up from 4.76 late Thursday.

The 30-year bond lost 22/32, or $6.87 on a $1,000 bond, to yield 4.96 percent, up from 4.91 in the previous session. Bond yields and prices move in opposite directions.

The five-year note fell 7/32 to yield 4.73 percent, while the two-year note slipped 2/32, yielding 4.83 percent.

A rising stock market undermined bond prices as investors turned toward riskier assets on good company earnings and talks of pending mergers.

Bonds lost earlier gains after traders bet the Federal Reserve would less likely cut interest rates later this year.

Economic reports in the week gave traders a murky outlook on economic growth and the future of interest rates due to mixed results.

The University of Michigan released results of its consumer confidence survey Friday which surprisingly rose in May, and also helped push bond yields lower.

The consumer confidence index rose to 88.7 from 87.1 at the end of April. Economists surveyed by Briefing.com had forecast the index would fall to 86.5 from 87.1, due greatly to the higher gas prices. However, rising gasoline prices did not raise consumers' fears on inflation as some analysts had predicted.

In currency trading, the euro traded at $1.3507, up from $1.3493 late Thursday. The greenback slipped to ¥121.12 from ¥121.31 the previous session.

-- from staff and wire reports