The US bond market rallied back from its deepest selloff in 17 months as traders ditched wagers that the Federal Reserve will hike interest rates, with the focus shifting to speculation the Iran war will deepen an economic slowdown.

The advance extended after Fed Chair Jerome Powell said the central bank has little control over supply shocks, like the surge in oil prices caused by US war against Iran. The late-morning comments, delivered during an address at Harvard University, eased concerns that the central bank would be forced to tighten monetary policy to keep inflation from accelerating, driving traders to start pricing in an outside chance of cuts this year instead.