Citigroup recommends traders position for lower bond volatility during the FIFA World Cup, citing historical patterns where US and European debt market swings diminish during the tournament. With matches starting June 11, the bank reiterated its bearish call on rates volatility, noting short-dated rates typically stay low or decline during the global sporting event.

Citi strategists point to the two- to 10-year yield curve showing more modest moves than current market pricing suggests. To capitalize on this trend, the bank recommends a short yield-curve volatility trade using options. The ICE BofA MOVE Index has fallen from March highs and remains below year-ago levels, indicating rates have settled into a relatively narrow range.

Market volatility typically eases during Northern Hemisphere summer as investors take vacations. The World Cup could further drain liquidity as traders shift focus to matches. Despite Middle East uncertainty, Citi expects short-term interest-rate volatility to remain subdued, citing the Federal Reserve's gradual approach to policy. After this week's consumer-price report, markets may see a month-long period of relative calm.