The Fed wants the rise to be gradual to avoid shocking the economy, although rate moves are not fully under the central bank's control. The Fed also is one of the Treasury market's biggest bondholders, owning 18 percent of the $11 trillion Treasuries, LeBas added.
Janney recommends sticking with five-year Treasury bonds, which are yielding 1.73 percent. Interest rates have to rise by 0.50 percent for an investor to lose money on a five-year Treasury, LeBas estimates.
There are "speed limits" on potential economic growth, including U.S. demographics, low household formation, and a lack of investment in real-economy innovation, he added. Monetarily, the next several years will be defined by the Fed's attempts to accelerate growth through these speed limits.
"The end of [quantitative easing] doesn't mean the Fed gives up stimulation," LeBas said. "Under [new Chairwoman Janet] Yellen, we expect alternative ways they will communicate expectations of what they're going to do in the future."
Fiscally, investment is being stymied by long-term uncertainty on tax policy.
So, interest rates are headed up, but probably not as high or as fast as Wall Street predicts, LeBas added. Janney's "highest case" for 10-year Treasury yields over the next few years, given levels of inflation, is just 4 to 4.5 percent.
"We would peg 4 to 4.5 percent as the settling area for 10-year Treasury yields and 5 to 5.5 percent as the settling area for 30-year Treasury yields, but it could take until 2016, when the Fed starts hiking short-term rates, to see those levels," LeBas said.
LeBas will address the Philadelphia Council for Business Economics on Tuesday at the Federal Reserve Bank of Philadelphia. For more information, visit the council's website, www.pcbe.org.