Investors feared that the bank's collapse could leave the financial market in tatters, just as Lehman Brothers' bankruptcy did in mid-September.
The yield curve is a key measure of investor sentiment, with a higher curve generally indicating a weaker economic environment.
The spread measures the difference between actual borrowing costs and the expected targeted borrowing rate from the Fed. It is used as a gauge to determine how much cash is available for lending between banks. The bigger the spread, the less cash is available for lending.
The TED spread measures the difference between the 3-month Libor and the 3-month Treasury bill, and is a key indicator of risk. The lower the spread, the more willing investors are to take risks.
