With signs of a revival in euro zone growth failing to lift government bond yields off historic lows this week, investors have started to fear the ECB's asset-purchase scheme may be inflating a dangerous bubble.
Since the European Central Bank launched its trillion euro quantitative easing program early this month, data has broadly beaten forecasts while long-term market inflation expectations have crept towards the ECB's target of just below 2 percent.
While this should point to an eventual tightening of monetary policy, and a normalization of interest rates, a third of the bloc's government bond yields remain anchored below zero.
"I've long resisted likening the bond rally to a 'bubble' but we are certainly seeing some pretty extraordinary events that make us question what's going on," AXA WF Global Strategic Bonds manager Nick Hayes said. "For me, 2015 should be about 'yield give up' not 'yield pick up'."
Strategists polled by Reuters this week were evenly split over whether the government bond market was exhibiting signs of an asset bubble.
Business activity as measured by Markit's flash composite purchasing managers' index for March was the highest recorded in any month since May 2011, and there are signs the recovery is also accelerating in the 19-nation bloc's weaker economies.
Historically, positive economic surprises have usually dragged yields higher, but this relationship has broken down since the middle of last year, when speculation the ECB would launch a quantitative easing program began to intensify.
"European bonds are overvalued from a fundamental perspective, they look expensive relative to both other government bonds and other asset classes," said UBS in a note, predicting the recent rally will soon reverse course.
A survey released this week by the CFA Society of the UK showed more than 80 percent of 272 investors felt government bonds were overvalued, the most of any asset.
Three quarters of those investors also considered corporate bonds overvalued, the highest percentage since the survey began three years ago.