Europe’s debt markets were flooded by a wave of cash this week, but one spot remains calm: bond-trading desks.

The European Central Bank’s expanded bond-buying program has got off to a smooth start, according to traders at the region’s banks, with prices updating fluidly despite an unprecedented rally in prices and a lack of other investors selling their bond holdings.

Traders say the market has been orderly, even when the yield on German 10-year bonds halved this week to 0.2%. Yields on bonds issued by Southern European countries have also slumped. Yields fall when prices rise, and the ECB’s EUR1 trillion-plus ($1.06 trillion) bond-buying plan has pushed up prices aggressively, even though the initiative was well flagged in advance.

Gustavo Baratta, a government bond trader at Banca IMI in Milan, recalls seeing moves of this magnitude in the past, but those shifts usually involved Southern European bond prices heading swiftly in the opposite direction. I must admit that the real height of the euro crisis was very stressful. There was huge volatility. But now, the prices are there on the screens. We only have real stress when the prices disappear, he said.

The ECB began buying public-sector bonds on March 9, in line with its total planned monthly asset purchases of EUR60 billion. ECB executive board member Benoît Coeuré said Thursday that the ECB, with national central banks, bought EUR9.8 billion of bonds with an average maturity of nine years over the first three days of the program. This put the ECB on track to hit its target for March.

Let me state firmly that at this point there are no signs of issues in respect of sourcing the bonds, Mr. Coeuré said in a speech Tuesday, referring to concerns that a large portion of the government bond investor base, such as insurance companies, may be reluctant to sell into the program.

Analysts believe the ECB is pinning its hopes on global asset managers and bank treasuries selling bonds to hit its purchase targets.

David Woo, a strategist at Bank of America Merrill Lynch, said ECB data suggest non-European investors hold around EUR2.5 trillion, or 34%, of the eurozone government bond market. He predicted these investors could sell as much as EUR35 billion of eurozone bonds every month, which will weigh heavily on the value of the euro.

In these early stages, traders say the majority of the bonds bought by the ECB have come from bank trading desks’ inventories, with other investors largely sitting on the sidelines.

Our sense is the market is very much bereft of sellers at this point, said Ian Morgan, co-head of European rates sales at Société Générale.

Andrew Millward, head of European rates trading at Morgan Stanley, said bank inventories alone would support ECB buying for a matter of days or weeks rather than months.

One big surprise for traders is the sharp jump in government bond prices, which suggests that markets had failed to fully anticipate and price in the ECB’s well-telegraphed program. This contrasts with bonds dropping after the start of the U.S. Federal Reserve’s asset-purchase programs.

That’s quite unusual in financial markets, where you usually get ‘buy the rumor, sell the fact,’ said Zoeb Sachee, head of European government bond trading at Citigroup. It’s probably because there is some validity in the commonly held view that there is likely to be a scarcity of bonds.

The official buying is also prompting other private investors to scramble for bonds with higher returns, pushing down the yield on longer-term bonds.

The biggest surprise has been the market’s reaction, said Morgan Stanley’s Mr. Millward. That’s not because of the way the ECB has conducted the program—it’s been very well coordinated and managed in a very transparent and predictable manner. It’s because of the hunt for yield.

Traders are wondering when that will crack, and foreign investors will give up on these bonds that now yield so little. Indeed, EUR1.8 trillion of eurozone government bonds now yield less than zero, according to Bank of America Merrill Lynch, meaning investors effectively pay to hold them. Many traders and analysts agree that the collapse in returns available on these expensive bonds will eventually force foreign investors to move. Japanese money managers, for instance, no longer have to look abroad for returns: 30-year Japanese government bonds yield 1.46%, compared with just 0.58% for equivalent German bonds—a big gap even accounting for currency differences. U.K. and U.S. government bonds offer even higher returns.

But so far at least, global asset managers have been cautious about moving too early, with many investors still hopeful they can sell at even higher prices. With the ECB saying it will buy bonds as long as yields remain above its deposit rate of minus 0.2%, 10-year German government bond yields could fall another 0.4 percentage point from here, noted Mr. Morgan at Société Générale.

Write to Christopher Whittall at christopher.whittall@wsj.com and Katie Martin at katie.martin@wsj.com

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(END) Dow Jones Newswires

March 12, 2015 08:22 ET (12:22 GMT)