UPS and other Transport stocks surprise Wall Street

Picture the UPS whiteboard guy doing his thing. He draws the UPS stock price first, showing a 15 percent gain year-to-date and an 8 percent comeback in the last three months alone. Then, as a “Postal Service” song plays, he overlays the 10-year Treasury yield, showing that the two have traded in lockstep for two years until recently.

UPS, a barometer for consumer purchasing activity in the U.S., is usually a leading indicator of the economy, tracking a pick up in demand and pricing power. Bond yields are usually the same, rising as economic and inflation expectations increase.

So who’s right?

"Transports are indicating goods are moving," said Steve Cortes, founder of Veracruz LLC and the resident whiteboard user on ‘Fast Money’. “Bonds are priced for an incredible slowdown, if not deflation, but UPS is saying the opposite.”

A report yesterday showed that the consumer mood unexpectedly improved. The Conference Board’s Consumer Confidence Index increased to 53.5, from 51.5 in July. That follows two straight months of declines.

Transports and consumer shares were among the top performers today, while bonds got slaughtered and yields shot higher after strong economic data from China and the U.S.

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Ref: http://www.cnbc.com/id/38954014

John Melloy is the Executive Producer of Fast Money. Before joining CNBC, he was an editor for Bloomberg News, overseeing the U.S. Stock Market coverage team