Given rates are largely moving to a negative posture in Europe it makes sense to look at the situation there, but keep in mind, it is moving that way in North America too so have some foresight on what is happening there to protect yourself from it happening here.
First of all, let's look at the Swiss Gov't bond curve where 30yr bonds just went to negative yields this morning! That's right, you are paying the Swiss National Bank about .03% to hold on to your money for 30yrs. Why? A couple of main reasons: 1) safety of principal and 2) the threat of deflation. (Top line is the Swiss curve just before the 2008 crisis and the bottom is today).
So here is the result. See DBK's 5yr CDS (Credit Default Swaps) as a metric for what credit markets think about DBK. The higher the CDS Spread is, the worst the view on DBK and the higher the potential for a Credit Event...(read, Default). Moving higher...
Another reason why High Rock accounts do not own any bank securities.
Next up on this Mini-Series on Banks and Yield Curve will be the Debunking of the Myth that Canadian Banks are "safe and steady".