Basis Point (BPS)

MarketWatch  Oct 2  Comment 
Treasury yields plummeted Friday to their lowest level since late April, after the Labor Department said that the U.S. economy created 142,000 new jobs in September, well below economists' forecasts. The yield on the 10-year benchmark Treasury...
MarketWatch  Oct 2  Comment 
10-year Treasury yield sinks 10.2 basis points to 1.940%
The Hindu Business Line  Sep 30  Comment 
A day after the RBI announced a 50 basis points repo rate cut, Kolkata-based lender, UCO Bank, has said it will reduce the base rate by 25 basis points.  The base rate, which will co...
The Hindu Business Line  Sep 30  Comment 
The Hindu Business Line  Sep 30  Comment 
The Economic Times  Sep 29  Comment 
"We needed to give an impetus to the economy and the Governor has done the right thing by cutting rates by 50 bps."
The Economic Times  Sep 28  Comment 
'Inflation is well within the target zone, indirect tax revenues have been buoyant and investor confidence is much improved.'
The Economic Times  Sep 28  Comment 
All the factors such as a slow domestic economic expansion, negative inflation and low CAD at 0.2 per cent of GDP make a compelling case for a rate cut.
MarketWatch  Aug 25  Comment 
The yield on the 10-year Treasury rose 5.4 basis points to 2.052% Tuesday after China's decision to lower its benchmark interest rates gave global markets a boost. On Monday, the yield on the 10-year dipped below 2% for the first time in nearly...
MarketWatch  Aug 24  Comment 
10-year Treasury yield skids 8.6 basis points to at 1.962%


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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