The Watchful Peace is a relatively peaceful period during the Third Age.
The Watchful Peace began in Third Age 2063, when Gandalf went to Dol Guldur and the evil dwelling there (later known to be Sauron) fled east. It lasted until 2460, when Sauron returned with new strength.
During the Watchful Peace Gondor strengthened its borders, keeping a watchful eye on the east, as Minas Morgul was still a threat on their flank and Mordor was still occupied with Orcs. But no major escalations occurred except for minor skirmishes with the Haven of Umbar.