0.01%, one hundred basis points = 1%. Sometimes mislabeled as bp; the platform's term is Basis Point.
What this unit is
A basis point (Basis Point) is one part in ten thousand: 0.01%. One hundred basis points equal one full percentage point. It is the standard unit for anything that moves in fine fractions: yields, rates, spreads and fees.
Why it exists at all
To remove the "percent of what?" ambiguity: saying "rates rose 1%" is dangerously unclear. Did they go from 4% to 5% (a full point), or to 4.04% (one percent of the value)? Basis point language settles it: "rose 100 basis points" can only be read one way. In markets where decisions rest on fractions of a rate, precise language is risk management.
Sizing it
In bonds, basis points are small earthquakes: a twenty-point move in the 10-year yield in one session is a big event that reprices every asset, because trillions of debt are discounted on these fractions. In fees the effect is quiet and cumulative: a thirty-basis-point annual gap between two funds eats about 6% of wealth over twenty years.
Hypothetical example
A rate decision comes in twenty-five basis points above expectations, and the 2-year yield jumps eighteen points in an hour: a full repricing of the whole rate path. Growth stocks take the hardest hit because their distant earnings are discounted at the new rate.
Common mistake
Mixing up a percentage point and a basis point when reading fast: "yield rose 50 points" could mean half a percentage point (basis points) or fifty full ones (percentage points, almost always impossible). Context decides, and the platform always uses the explicit name.
Where the effect piles up
In two places: the debt market, where trillions are discounted on these fractions and a twenty-point move reprices all assets, and fees, where a thirty-point annual gap between two funds eats about 6% of wealth over twenty years. A small fraction becomes large with time and size.
Where to see it on the platform
All yield and rate data in the macro dashboard is shown in them, with the full name on first appearance.
All yield and rate data in the macro dashboard is shown in them, with the full name on first appearance.
