Series 3: 2.1.2.3. T-Bond And T-Note Quotations: Bond Points And Basis Points

2.1.2.3. T-Bond and T-Note Quotations: Bond Points and Basis Points

Treasury notes and bonds are quoted in the market in terms of their price and their yield to maturity. Price is further expressed as both a bid and ask price. The bid is the price a dealer is willing to pay for the bond. The ask is the price at which a dealer is willing to sell the bond. Note that an investor will purchase a Treasury from a dealer at the ask and sell a Treasury to the dealer at the bid. Both figures are expressed in numerical shorthand that you will need to know and understand.

Bond points and dollar price. The market price for all notes and bonds is quoted as a percentage of the bond’s par value. Percentages are expressed in terms of bond points. A bond point represents one hundredth, or one percent, of par. Ten bond points is 10% of par; five bond points is 5% of par. A discount bond trading at $960 will be quoted at 96. This represents 96 bond points, or 96% of par.

Price quotes for Treasury notes and bonds are split further into units of 32nds. A price quote of 98-11 refers to a price of 98 11/32% per $100 of par value, or 98.34375. A price of 103-08 refers to a price of 103 1/4% of par, or 103.25. A typical bond quote might look like this.