Bond markets have remained stable since Donald Trump's election victory, with the yield on 10-year US Treasury bonds returning to pre-election levels after an initial selloff.

Concerns about potential tax cuts, immigration crackdowns, and steep tariffs that could widen the budget deficit and increase inflation have not caused significant market volatility.

The term premium, which measures the risk of holding long-term government debt, has also decreased to a one-month low, indicating a calm sentiment among investors.

Analysts believe that much of the worry about an overheating economy had already been factored into bond prices before the election.

Market participants seem to be betting that Trump's administration may not fully implement his more extreme campaign promises, with expectations that the more concerning aspects of his agenda will be moderated.

Greg Peters, co-chief investment officer at PGIM Fixed Income, expressed doubt about the optimism surrounding potential policy outcomes, emphasizing the remaining uncertainty in the market.