2. M&A activity is accelerating. Chatham expects high corporate liquidity and improved borrowing conditions to drive mergers and acquisitions (M&A) activity. According to the recent Chatham poll, 85 percent of capital market participants plan to hold their current investments or focus on acquisitions in 2025. This growth-oriented mindset aligns with stable or declining capital costs. At the same time, we expect to see a growing number of spinoffs and divestitures this year, as companies aim to strengthen their balance sheets and focus on core operations.

Treasurers will play a critical role in evaluating and facilitating both M&A and divestiture initiatives, including cross-border acquisitions designed to expand the company’s market access and talent pools. Throughout these transactions, treasury teams must protect deal economics; optimize capital structures; and integrate operational, technological, regulatory, and accounting processes across combining companies.

3. Interest rates: Plan on “higher for longer.” Interest rates remain a pivotal consideration for treasury planners this year. As of September 2024, 78 percent of Chatham poll respondents predicted a decline of 25 basis points or more in the 10-year Treasury yield by the end of 2025. This optimism may have stemmed from the Federal Reserve’s recent cuts to the federal funds rate. However, treasury teams need to keep in mind that the 10-year Treasury yield has exhibited significant volatility over the past year, with its peak exceeding expectations.

Treasurers should conduct robust scenario analyses to prepare for a wide range of possible macroeconomic conditions. Monetary policy, fiscal policy, and geopolitical uncertainty will all influence Treasury bill rates, making strategic planning essential.

4. Revisit FX strategies amid volatility. Currency volatility has increased due to diverging central bank policies, varied economic growth trajectories, and geopolitical factors such as tariffs and trade tensions. These dynamics are prompting organizations to revisit their foreign exchange (FX) strategies. Many companies are initiating cash flow and balance sheet hedging programs and exploring cross-currency swaps for the first time. To inform and automate these efforts, many businesses are adopting comprehensive FX risk management platforms.

5. Data drives decision-making. Technology is reshaping treasury operations, with more than 90 percent of Chatham poll respondents anticipating moderate to transformative impacts from artificial intelligence (AI), business intelligence, and other emerging technologies. Today’s advanced platforms enhance visibility into risk exposure and program performance while facilitating stakeholder communication.

Savvy treasury teams are increasingly leveraging automation and outsourced expertise for non-core functions, while maintaining in-house resources for strategic decision-making. By focusing on their strengths and working with trusted partners for specialized activities, treasury organizations can maximize efficiency while ensuring that their strategies are built upon data-driven insights.

Prepare, Adapt, and Collaborate

Throughout 2025, corporate treasurers will face a rapidly evolving business landscape defined by economic uncertainty, technological innovation, and global challenges. By preparing in advance to deal with trends such as competitive capital markets, accelerating M&A activity, interest rate fluctuations, FX volatility, and the rise of data-driven decision-making, treasury teams can position themselves as strategic enablers of growth and resilience.

Preparation, adaptability, and collaboration will be essential in turning challenges into opportunities and helping ensure the business’s long-term success.