basis point

noun

|Updated on: 18 Jun 2018

Definition of basis point

: one hundredth of one percent (as in the yield of an investment)

Recent Examples of basis point from the Web

After retracing somewhat, the July contract is now printing about 22 basis points above the Fed effective rate of 1.70 percent.

— BostonGlobe.com, "Bond traders brace for major moves in aftermath of Fed meeting," 12 June 2018
By May 23rd the gap between the yields on Italian and German government ten-year bonds, which reflects concern over Italy’s ability to service its public debt, had grown to more than 190 basis points from 114 on April 24th.

— The Economist, "A bizarre new government takes shape in Italy," 24 May 2018
Rising rates isn't exactly a new problem for markets — the 10-year yield jumped 30 basis points in January alone — but this time the rise is driven by surging commodity prices, not heady economic gains.

— bloomberg, latimes.com, "How 3% Treasury yields could reshape the investing landscape," 23 Apr. 2018
Britain’s 10-year yield declined two basis points to 1.558 percent.

— Fortune, "'It Was Excessive Confidence.' Dow Jones Industrial Average Plunges 1,1000 in Biggest One-Day Selloff Ever," 5 Feb. 2018
Get our daily newsletter In a sign of investors’ concern, the yield gap between Italian and German benchmark government bonds soared from 190 basis points on May 28th to more than 300.

— The Economist, "Italy’s bond yields rise as it heads for another election," 29 May 2018
Treasuries rose, with 10-year yields falling 5 basis points.

— andreea papuc, Bloomberg.com, "Five Things You Need to Know to Start Your Day," 27 May 2018
That outperformance has helped push spreads on the Bank of America Merrill Lynch gauge of CCC rated debt to below 700 basis points earlier this week — the smallest premium since July 2014.

— Fortune, "Riskiest Junk Bonds Are Most 'Mispriced' Since 2007, Goldman Says," 25 May 2018
Yields on Italian government bonds have risen by more than 60 basis points over the past three weeks as investors worry the new government could follow through on its promises to challenge European Union orthodoxy.

— tom fairless, WSJ, "Europe’s Economy Throws a Wrench in the ECB’s Plans," 24 May 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'basis point.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of basis point

1962

in the meaning defined above

See Words from the same year

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Financial Definition of BASIS POINT

basis point

noun

What It Is

A basis point is one hundredth of one percent.

How It Works

There are one hundred basis points in one percent.

Let's say Bank XYZ pays 2.54% interest on its savings accounts. A month later, it raises the rate to 2.75%. We would say that rate increased by 21 basis points.

Why It Matters

Basis points are in anything that is expressed as a percentage: interest rates, rates of return, bond coupons, rates of change and much more. Because tiny changes can have big effects, it is no surprise that the markets are concerned about hundredths of a percent.

Source: Investing Answers