Case Study · This Tool Would Have Told You
Free to readWhen Financial Stress Fed Into the Index — March 2023
The regional-banking crisis started in financials. TLT's term structure shows the rate stress at the heart of it — and reading SPY alongside shows how that stress fed into the broad index.
August 2024 and March 2020 inverted the whole market at once. March 2023 started narrower: the stress was in financials — the plumbing of banks, credit and rates. You can read it in TLT, whose term structure backwardated as the rate market repriced the shock. But it didn't stay in one corner: by mid-March it had fed into the broad index, and SPY's own curve backwardated too — its front week bid hardest of all. Reading the two together traces the path the stress took.
The setup
On March 8, 2023, Silicon Valley Bank announced an emergency capital raise and Silvergate wound down. Confidence cracked fast. By March 10 SVB had failed in the largest bank run on record; Signature Bank followed on March 12, and a federal deposit backstop was announced that Sunday. The tremor crossed the Atlantic: Credit Suisse drew an emergency SNB credit line on March 15 and was sold to UBS on March 19.
SVB capital raise; Silvergate winds down. Front-end VolDex bids first where the stress is — rates and financials — as the funding scare spreads.
SVB stock collapses; record bank run; SVB fails. Backwardation in the banking/credit complex; rates whipsaw.
Signature fails; deposit backstop announced. Front-end VolDex peaks; TermDex® deeply negative in the affected names.
Credit Suisse backstop, then UBS takeover. Stress crests and begins to drain as backstops land.
Curves re-steepen toward contango. TermDex normalizes — fastest where the backstop was most direct.
What the curves showed
This is the cross-asset lesson. The stress started in financials, and you can read it in TLT: on March 17 its term structure was backwardated, the front end bid as the rate market repriced the banking shock. But the panic didn't stay in one corner — it fed into SPY, whose curve backwardated too, its front week actually spiking hardest of the two (to roughly 27.6) before normalizing toward 22 within a month. TLT peaked lower, near 25, but stayed bid across the two-to-five-month belly — the rate stress lingering after the equity jolt began to fade. Read side by side, the two curves trace how a sector shock became a market-wide one.
Actual SPY and TLT VolDex® by tenor on March 17, 2023. The regional-banking stress shows in TLT's backwardated rate curve and fed into SPY, whose front week bid hardest (~27.6) before normalizing to ~22 within a month; TLT peaked lower (~25) but stayed bid across the belly, easing to ~21 at a year. Tenors spaced by calendar days.
The single number did the cross-asset work for you. On March 17, TermDex was negative on both — the financial-sector stress that showed first in TLT had fed into SPY, so both curves were backwardated. TLT's reading was shallower but spread across the curve; SPY's was steepest right at the front. Read together, they showed a sector shock propagating into the broad index. As the backstops landed, both normalized.
This case study is free to read. To scan TermDex across underlyings live and replay this episode, you need historical data — Everything (single names via ETF + Equities).
See plans →The trade the two curves pointed to
When a sector shock feeds into the index, the term structure becomes a relative-value map. TLT's front-end bid flagged where the stress lived — the rate and financial plumbing — while SPY's sharper front showed it had reached the broad index. The clean expression is a calendar — sell the rich front week, own the cheaper back — sized to the steepest curve (here SPY), while TLT's flatter, more persistent bid says the rate uncertainty won't clear as fast.
The lesson
March 2023 is why the underlying selector matters. A shock can start in one sector — here, financials — show up first in the assets closest to it, like TLT, then feed into the broad index. The only way to see the whole path is to read several curves and let TermDex flag where the stress is and where it's spreading. One screen, eleven markets, thirty seconds — and you know not just that there's fear, but where it began and how far it has traveled.
Educational content from Nations Indexes. VolDex® and TermDex® are registered marks of Nations Indexes. The term-structure chart shows actual SPY and TLT VolDex® values by tenor on March 17, 2023. Event facts (SVB, Signature, Credit Suisse, dates) are historical and verifiable. Nothing here is investment advice or a guarantee of any outcome.