The 30-year bond last rose 5/32 in price to yield 2.8107 per cent, from 2.818 per cent late on Wednesday.
The so-called fear gauge - the CBOE Volatility Index (VIX), the most widely followed barometer of expected United States stock market volatility, hit its highest since November 8, when Mr Trump was elected president.
"Geopolitical tensions are the key driving force this morning, boosting demand for safe havens", TD Securities analysts said in a note. The broad-based S&P 500 dropped 0.2 percent to 2474.92 points, and the Nasdaq dropped 0.2 percent to 6370.46 points. Platinum also moved up 0.8% to $979.85, while palladium moved up a percentage point to $900.30.
President Donald Trump said Friday that the USA military was "locked and loaded", while Pyongyang accused him of driving the Korean peninsula to the brink of nuclear war. The pan-European benchmark on Wednesday fell 0.7% in a sell-off prompted by tensions between the USA and North Korea escalated.
THE QUOTE: "Risk-averse sentiment is dominating global equities markets, and USA indices have retraced from record levels over the last two days".
Australian stock futures dropped 1.2 percent and New Zealand stocks slid 1.1 percent.
Traders' screens were in the red in Asia and much of Europe as investors fled to safe haven assets after US President Donald Trump doubled down on his North Korea rhetoric. He added that in China, the US and South Korea, stocks that are showing the biggest declines since the rise of tensions between the USA and North Korea are the companies that have risen most since June.
"The slight bias to the upside (in stocks) is a result of the CPI number".
Japanese markets were closed for a holiday but the yen powered on, hitting an eight-week high of 108.91 yen to the dollar, adding to its biggest weekly gain since May.
The euro was down 0.4 per cent at just over $1.17 and nearing a two-week low, while the New Zealand dollar tumbled a full one per cent as its central bank head bluntly said he wanted it lower.
A Labour Department report showed its producer price index posted a surprise drop in July, down 0.1 percent for the largest slide in nearly a year.
Selling was broad. Declining issues outnumbered advancing ones on the NYSE 6-to-1; on Nasdaq, a 3.60-to-1 ratio favoured decliners.
Small attributed a large part of the Dow's decline to disappointing earnings from Disney after the media giant reported a weak quarter, said it would pull its movies from Netflix and start two of its own video streaming services.
S&P 500 e-minis were down 4.5 points, or 0.18 percent, with 209,543 contracts traded.