Yield Basis is a term used in the bond market to describe the difference between the yield on a bond and the yield on a benchmark, such as a Treasury bond, for bonds with similar maturities and credit ratings.Yield basis measures the spread between two yield curves and reflects the relative value of a bond compared to a benchmark. It is often used to assess the relative value of a bond and to make investment decisions based on yield relative to the benchmark.A positive yield basis indicates that the bond in question has a higher yield than the benchmark, and is therefore considered to be relatively more attractive to investors. On the other hand, a negative yield basis indicates that the bond has a lower yield than the benchmark, and is considered relatively less attractive.Yield basis can also be used to compare bonds of different credit ratings, where a higher yield basis for a lower-rated bond may reflect the higher credit risk associated with that bond.It's important to note that yield basis is only one factor to consider when evaluating the relative value of a bond, and that other factors, such as the creditworthiness of the issuer, the coupon rate, and the maturity of the bond, may also have a significant impact on the value and risk of the investment.
