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(Bloomberg) — A renewed slump in commodities damped inflation expectations and boosted demand for Treasuries, while China’s shock devaluation of its currency continued to unsettle emerging markets.

The Bloomberg Commodity Index sank to a 13-year low as declines in assets from copper to oil boosted the value of fixed-income assets. U.S. stocks churned higher, with equities returning to the middle of the range they’ve been stuck in since March amid mixed economic data and light trading volumes. Emerging-market currencies tumbled amid lingering concern over the impact of a Chinese slowdown on other developing economies.

“It’s a quiet Monday and the market is fairly easy to move around right now,” said Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co. in Milwaukee. “We’ve reached a stalemate and we’re not going to break out until we see something from the Fed.”

The Standard & Poor’s 500 Index rose 0.5 percent by 4 p.m. in New York, climbing above its 50-day moving average. Yields on 10-year Treasuries fell three basis points, or 0.03 percentage point, to 2.17 percent. Emerging-market currencies extended the longest selloff since the turn of the century, with the Turkish lira and Russian ruble leading declines, while stocks in developing nations tumbled 1.1 percent. The Thai baht slid after a bomb killed 19 people near a shrine in Bangkok.

The S&P 500 ended last week up 0.7 percent, initially erasing its gain for 2015 before staging the biggest intraday turnaround in three years. Monday’s move higher returned the gauge to the middle of its tightest trading range in nine decades.

Sweet Spot

Trading in S&P 500 stocks was 26 percent below the 30-day average, according to data compiled by Bloomberg.
“I like the U.S. equity market here,” Adam Parker, chief U.S. equity strategist at Morgan Stanley, said on “Bloomberg Surveillance” with Tom Keene and Vonnie Quinn. “The economy isn’t great, but it’s going to be a little bit better in the second half of the year.”

U.S. stocks retreated early Monday on data that indicated manufacturing in the New York region fell at the fastest pace since the depths of the last recession. Equities reversed the decline as a separate report showed confidence among homebuilders advanced.

Investors are scrutinizing U.S. economic data to gauge the economy’s health. The Federal Reserve releases minutes from its July meeting on Aug. 19, with market expectations of a September rate hike rising from a week ago to about 50-50.

Dollar Stuck

The dollar remained stuck in limbo versus the euro as investors speculated the Fed will take its time boosting borrowing costs. While the slowdown in China and the rout in commodities have boosted the greenback, signs of European growth have kept it in check versus the common currency.

The dollar gained 0.3 percent to $1.1078 per euro, hovering near its short- and medium-term average of $1.10. The Bloomberg Dollar Spot Index, which tracks the currency versus 10 major peers, rose 0.2 percent in a third day of gains.
Energy producers were the only group in the S&P 500 to retreat, as crude slid to a six-year low. West Texas Intermediate fell 1.5 percent to $41.87 a barrel in New York, amid concern the global supply glut will persist.
Copper fell 1 percent in London, adding to six weeks of declines fueled by signs of slowing growth in China. Aluminum, lead and zinc also slipped, while nickel advanced.

Gold climbed 0.5 percent to settle at $1,118.40 an ounce. The metal gained 1.9 percent last week, its first advance since June, on demand for haven investments.

China Focus

“China remains close to the center of the market’s radar which is underpinning the commodity weakness,” said Richard McGuire, head of European rates strategy at Rabobank International in London. That’s “feeding into a bullish tone in fixed income across the board,” he said.

A gauge tracking 20 of the most-traded developing-nation currencies dropped 0.4 percent, with Malaysia’s ringgit weakening to the lowest level since 1998.

The currency measure has fallen for eight straight weeks as the prospect of higher U.S. rates and the surprise devaluation of the yuan magnified risks.

China’s devaluation “will be something that will shape the rest of the year for emerging-market currencies, especially given the fact that people view this as a clear indication that the Chinese authorities are worried about the state of their economy,” said Anders Svendsen, an analyst at Nordea Bank A/S in Copenhagen.

–With assistance from Callie Bost, Andrea Wong, Joseph Ciolli and Elena Popina in New York and Natasha Doff and Stephen Kirkland in London.

To contact the reporter on this story: Jeremy Herron in New York at jherron8@bloomberg.net To contact the editors responsible for this story: Emma O’Brien at eobrien6@bloomberg.net Jeremy Herron