Investors bought bonds after the Labor Department said the consumer-price index increased 0.1% in July from the previous month.
Hope that the Fed will have to slow its rate hike path appeared to stop, at least for now, the near $1-trillion loss in world stocks valuations this week triggered by the war of words between Pyongyang and the United States. The dollar hit an eight-week low against the yen Thursday on U.S.
"There's not a great incentive to buy big", said Lerner of SunTrust Advisory. It earlier hit $1,291.86, its highest level since June 7. Eastern time. The Dow Jones industrial average added 20 points, or 0.1 percent, to 21,865.
The CBOE Volatility Index, a barometer of expected near-term stock market volatility, closed at its highest since the usa presidential election on Thursday, but was down 1.22 points at 14.82 points on Friday. The S&P has lost more than 1 percent on only three days this year.
South Korea's fell 1.7 percent to its lowest since May 24, but its losses for the week are a relatively modest 3.2 percent.
"Pretty remarkable, perhaps even extraordinary, considering", said Tim Ash, strategist at fund manager BlueBay.
Ryu Yong-seok, a market analyst at KB Securities Co., said North Korea risks could continue to weigh in the main index, though there are no negative factors that could undermine South Korea's economic fundamentals.
Rising tensions between North Korea and the United States were once again the theme of the day with only the release of much-awaited inflation figures out of the U.S. managing to divert attention away from developments on that front.
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Silver futures gained 0.202 dollar or 1.2 percent to close at USD 17.07 per troy ounce at the COMEX.
Investors have also headed to other traditional havens, such as the Swiss franc and the Japanese yen. Germany's DAX fared better, trading only 0.2 percent lower at 11,989. The market was also waiting for USA inflation data on Friday that would offer clues about the extent to which the strengthening USA labour market is spilling over into inflation.
The data comes amid tepid inflation that has remained below the Fed's 2% target, despite low unemployment.
The euro edged 0.3 per cent lower to 1.1726 against the dollar.
On the currency front, the U.S. dollar is trading at 108.82 yen compared to the 109.20 yen it fetched at the close of NY trading on Thursday.
The Japanese yen last strengthened 0.03 percent versus the greenback at 109.22 per dollar.
The increased geopolitical tensions this week, centred on the Korean peninsula and the nearby USA territory of Guam, have caused stock markets around the world to fall back as investors turn cautious.
As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2 basis points at 2.192 percent.
The 30-year bond last /32 in price to yield 2.7933 percent, from 2.794 percent late on Thursday.
Spot gold added 0.7 per cent to $1,285.70 an ounce. This week has seen its biggest rise since June 2016.
Concluding with oil, WTI was last 1.0% down on the day, just above $48 a barrel, while Brent crude was 0.9% down, around $51.40 a barrel.