Basis Point (BPS)

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The Hindu Business Line  Jul 2  Comment 
 Taimur Baig oversees global research at DBS Bank as Chief Economist and Managing Director. He tracks the G-3 and G-8 and their economies closely whil
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The Hindu Business Line  Jun 5  Comment 
Our BureauBank of Baroda on Tuesday said it will up its marginal cost of funds-based lending rates (MCLR) across tenors by five basis points with eff
MarketWatch  May 23  Comment 
Treasury yields added to their decline on Wednesday after the Federal Reserve released the minutes from its May 1-2 meeting. The 10-year Treasury note yield fell 4.4 basis points to 3.021%, according to Tradeweb data. The 2-year note yield was...
MarketWatch  Mar 26  Comment 
An auction of 2-year Treasury notes saw weak demand, pushing yields higher across the board. The 2-year Treasury note yield rose 2.5 basis points to 2.287%, according to Tradeweb data. The 10-year note yield was up 1.9 basis points to 2.845%,...
Mondo Visione  Mar 21  Comment 
Yields on 3-month and 10-year Treasuries have moved in different directions. According to Tradeweb data: U.S. Treasury Yields (change in bps) Security Current Close: 3/20/2018 Change ...
The Economic Times  Mar 21  Comment 
The vote to lift the federal funds rate target range to 1.5% to 1.75% was a unanimous 8-0.




 

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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