Anita Yadav, Managing Partner at SJ Seymour, a corporate bond brokerage in Singapore, said investors were fleeing risk in the credit markets as well, avoiding even investment-grade names and pushing the yield on the 10-year Japanese Government Bond to 0.82 percent, the lowest since 2003.
Leaders of the Group of Eight nations will be gathering at Camp David this weekend but analysts say the G8 is unlikely to come up with any major steps and the focus will remain on the ECB and its President Mario Draghi.
“Draghi holds the cards,” David Kotok, chief investment officer at Cumberland Advisors told CNBC. “Not the finance ministers. The only game in town is the ECB.”
Unlike the Federal Reserve, which has cut rates to zero percent, the ECB has kept interest rates at 1 percent. The ECB hasn't bought government bonds in large amounts as the Fed did with its quantitative easing (QE) programs though it has provided the banking system with two rounds of liquidity via the long-term refinancing operation (LTRO).
Draghi's predecessor, Jean-Claude Trichet, meanwhile, has suggested a radical plan to save the Euro, which would shift the onus away from the central bank and on to politicians. According to Reuters, the plan would give European leaders the power to declare a sovereign state bankrupt and take over its fiscal policy.
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