"Investors did not know in 1998 that Japan's key policy rate would remain near zero for the next 16 years (and counting). But the prospect of it remaining there for the foreseeable future was enough to keep the 10-year yield quite firmly anchored," he said. "We see no reason why a similar outcome couldn't happen in Germany," as the bund yield fell below 1 percent after the European Central Bank (ECB) cut its main rate to 0.5 percent in mid-2013.
Read More Are Treasury yields headed for Japanese levels?
Capital Economics cut its end-2014 and end-2015 forecasts for the bund yield by 25 basis points each to 0.75 percent and 1.0 percent respectively. It also cut its end-2016 bund yield forecast to 1.00 percent from 1.50 percent.
It's not just government bond yields that are spurring concerns the euro zone faces "Japanification."
In the third quarter, euro zone gross domestic product (GDP) grew by 0.2 percent on the previous quarter, with regional economic powerhouse Germany narrowly avoiding a recession. In October, the region's inflation was 0.4 percent on-year, doing little to assuage deflation fears.
Read More The next big thing in government bonds: China?
"We think growth will be too weak to trigger tighter monetary policy. This has been the case in Japan," Higgins said, noting GDP there has grown only by an average 0.7 percent annually since the Bank of Japan cut its rate to 0.5 percent in 1995.
In the third quarter, Japan slid into recession, with its GDP contracting 1.6 percent on-year after the second quarter's 7.1 percent drop.