For the first time on record, Germany’s 10- year yields are below Japan’s, an ominous signal for European Central Bank President Mario Draghi as he seeks to revive the euro area’s economy.

Tumbling yields on German debt, the euro area’s benchmark sovereign securities, are inviting comparisons with Japan, a nation wracked by decades of zero nominal economic growth and falling consumer prices. Germany’s inflation rate turned negative in January for the first time in more than five years, while the ECB is preparing to pump more cash into the region’s economy via a quantitative-easing program to fend off the risk of deflation.

“It doesn’t provide much in the way of reassurance in terms of the market’s take on the ECB’s ability to reflate the economy via its imminent foray into QE,” said Richard McGuire, head of European rates strategy at Rabobank International in London. “Japanification of Europe is quite a familiar theme. The market is of the view that the disinflationary forces currently gripping Europe are by no means transitory.”

A surge in the price of German bunds pushed down 10-year yields by more than 130 basis points, or 1.3%age points, in the past year, leaving the rate at 0.33% as of 1:38 p.m. London time. Equivalent Japanese yields, which haven’t been above 1% since April 2012, jumped to 0.355% in Tokyo as bonds fell amid the weakest demand at an auction of the Asian nation’s benchmark debt since July 2013.

Inflation Outlook

Since Japan’s real-estate and stock-market bubble burst in the early 1990s, companies have focused on cutting debt and shifting manufacturing overseas. Wages stagnated and consumers reined in spending. That led to two decades with no nominal growth in the economy. Prices of goods kept falling, creating deflation that sapped optimism.

The risk is that the same pattern is repeated in Europe. Investors are already mopping up German securities as inflation slows in the euro area, preserving the purchasing power of the fixed payments on bonds.

The annual inflation rate in the region fell to minus 0.6% in January, matching the biggest decline in prices in the history of the single currency, according to data published by Eurostat. And the outlook for euro-area inflation in the second half of the decade, based on the five-year, five-year forward inflation-swap rate, dropped as low as 1.48% on Jan. 14, a record. It was at 1.61% on Tuesday. The ECB targets consumer-price growth of just below 2%.