Plain-English Definitions

Every fundamental-analysis term used across this course, defined in plain English. Use this page as a quick reference — if a term shows up in a lesson and you want the short version, it's here.

Core terms

• Basis point — one hundredth of a percentage point (0.01%). A move from 5.00% to 5.25% interest rates is a move of 25 basis points.
• Tightening — central-bank policy that raises interest rates or otherwise makes borrowing more expensive and monetary conditions more restrictive, usually to control inflation.
• Easing — central-bank policy that lowers interest rates or otherwise makes monetary conditions looser, usually to support growth or employment.
• Hawkish — a policy stance or tone leaning toward tighter policy / higher rates, usually reflecting greater concern about inflation.
• Dovish — a policy stance or tone leaning toward looser policy / lower rates, usually reflecting greater concern about growth or employment.
• Terminal rate — the level the market expects a central bank's policy rate to peak at (or bottom out at, during an easing cycle) before pausing or reversing direction.
• Quantitative easing (QE) — a central bank buying large quantities of financial assets, typically government bonds, to inject liquidity into the financial system and push longer-term interest rates lower, usually used when short-term rates are already near zero.
• Quantitative tightening (QT) — the reverse of QE: a central bank allowing its asset holdings to shrink (by not reinvesting maturing bonds, or by actively selling them), which tends to remove liquidity and put upward pressure on longer-term yields.
• Yield — the return an investor receives from holding a bond, expressed as a percentage of its price.
• Recession — a sustained, broad-based decline in economic activity, commonly associated with two consecutive quarters of falling GDP.
• Stagflation — a rare and difficult combination of stagnant (or falling) economic growth alongside persistently high inflation, which leaves a central bank with no easy policy choice, since fighting inflation with higher rates risks worsening growth, and supporting growth with lower rates risks worsening inflation.
• Soft landing — a scenario where a central bank successfully brings inflation back down to target without triggering a recession.
• Hard landing — a scenario where bringing inflation back under control comes at the cost of a recession or a sharp growth slowdown.
• Liquidity — how easily an asset can be bought or sold without significantly moving its price. "Thin liquidity" (for example, during holidays or the earliest hours of the Asian session) can make prices move more erratically on lower trading volume.
• Risk premium — the extra return investors demand for holding a riskier asset instead of a safer one, compensating them for taking on that additional risk or uncertainty.

Where to go from here

For the full context behind any term here, the lesson it comes from is the best place to see it explained properly. Once you've read through the course, the daily workflow page has the routine that ties everything together into a repeatable habit.