What is Yield Basis?
How Does Yield Basis Work?
Why Does Yield Basis Matter?
Yield basis is useful for easily comparing bond characteristics. Though dollar prices are helpful, they don't take into account the other characteristics of a bond.
In particular, the yield basis indicates whether a bond is trading at a discount or a premium. If the yield basis is greater than the coupon rate, the bond is trading at a discount; if the yield basis is lower than the coupon rate, the bond is trading at a premium. Thus, bonds are generally quoted on yield basis, particularly Treasurys.