Basis Point (BPS)

RECENT NEWS
The Economic Times  Jan 9  Comment 
National Bank for Agriculture & Rural Development or Nabard has slashed refinance rates by 20-30 basis points to boost farm investment and building warehouses.
The Economic Times  Dec 19  Comment 
"Possibility of a 50 bps hike over the next six months, but I suppose RBI will not do a 50 bps hike at one go , but maintain a calibrated approach."
FX Street  Dec 17  Comment 
A ForexTrading.TV Technical Analysis Video Alert for EURSEK For more information, read our latest forex news and reports.
FX Street  Oct 17  Comment 
A ForexTrading.TV Technical Analysis Video Alert for JGB For more information, read our latest forex news and reports.
MarketWatch  Oct 9  Comment 
Market pricing in 'modest' U.S. rate-tightening cycle
MarketWatch  Oct 9  Comment 
Treasury prices were mixed Wednesday ahead of an auction of 10-year notes . The 10-year note yield, which moves inversely to price, rose half a basis point to 2.639% ahead of a $21 billion sale of the notes. The 30-year bond yield rose 2.5 basis...
MarketWatch  Oct 4  Comment 
Treasury prices edged mostly lower Friday as the market showed signs of shutdown fatigue. Lawmakers in Washington are working toward a spending bill that would allow the government to reopen after four days of closure, as well as raise the...
MarketWatch  Oct 1  Comment 
The 1-month Treasury bill yield was up nearly 5 basis points Tuesday to trade at 7.4 basis points, substantially higher than the 1.8 basis point yield offered on longer maturity 3-month Treasury bills . The 1-month yield, which moves inversely to...
The Economic Times  Sep 23  Comment 
A second bet is that the margins could definitely improve by about 100 to 200 bps from where they are currently over next few quarters.
The Hindu Business Line  Sep 20  Comment 
Balances move with 75 bps cut in Marginal Standing Facility to boost liquidity




 

For the article on the company with ticker BPS, see BlackRock Pennsylvania Strategic Municipal Trust (BPS).

A basis point (abbreviated as 'bps' and sometimes pronounced "bips") is a unit that is equal to 1/100th of 1%, and is often used instead of percentages when discussing interest rates, rates of return, and other percentage-based performance metrics that can occur as fractions of a percent. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security.

It is common practice in the financial industry to use basis points to denote a rate change in a financial instrument, or the difference (spread) between two interest rates, including the yields of fixed-income securities.

1% change = 100 basis points, and 0.01% = 1 basis point.

So, a bond whose yield increases from 5% to 5.5% is said to increase by 50 basis points; or interest rates that have risen 1% are said to have increased by 100 basis points. The marginal effect of each basis point change in the value of long term bonds can be very significant for this reason changes are tracked by basis points or 1/100th of 1%

Since certain loans and bonds may commonly be quoted in relation to some index or underlying security, they will often be quoted as a spread over (or under) the index. For example, a loan that bears interest of 0.50% per annum above the London Interbank Offered Rate (LIBOR) is said to be 50 basis points over LIBOR, which is commonly expressed as "L+50bps" or simply "L+50"

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