Japanification of bond market?

Since the European Central Bank launched its first quantitative easing program in 2015, a common topic among fund managers and in rating agency reports was the risk of the Japanification of the European bond market; that is the prospect of one of the biggest bond markets in the world shrinking constantly, with investors having ever decreasing options for purchases and opportunities for profits due to the main buyer, the ECB.

Ioannis Sokos, director for Fixed Income Research at Deutsche Bank, says: "My answer to all these concerns has always been the same: What would have happened if the ECB was not the dominant buyer of the European government bonds market? In the absence of ECB QE I think that eurozone breakup risk would have been much more significant than it was in the aftermath of the EU debt crisis. Hence, although this is fair and accurate criticism as liquidity is...