September Monthly Insights: Oil and the Fed, Estimated Taxes, and 3% TIPS Real Yields

Written By Danni Shen, CFA®

Hi there,

You did not receive an August newsletter, and I want to tell you why. I spent August in China with my parents and old friends. It was terrific. Trips like that always remind me what matters most to me: deep connections with the people I love and the people I like. I hope your summer gave you a little of the same. If it also gave you a reason to revisit your plan, reply to this email and we will set up time.

On Tuesday, September 1, we hosted our webinar "Retire Confidently: Manage Social Security and Mitigate Taxes." If you missed it and would like the recap or the slides, just reply.

Here are three topics worth a closer look this month. You may reply to this email at any time to opt out of the monthly newsletter.

In this issue

1. Oil, the Fed, and the September 16 meeting [1]

In our June newsletter we said we thought oil prices were being underestimated, and we upgraded energy to overweight to help cushion two risks at once: a slowdown in AI spending and a longer period of elevated oil tied to the Iran conflict and restrictions in the Strait of Hormuz. Since then, Brent crude has moved from under $70 per barrel in mid-June to roughly $100 per barrel on September 8, up about 17% over the past month and about 50% over the past year. The U.S. Energy Information Administration (EIA) now expects Brent to average about $90 in the second half of 2026 and to ease toward $74 in 2027 as production rises and inventories rebuild, assuming flows through Hormuz gradually improve. Energy stocks reached record highs in mid-August, and LPL Research continues to recommend an overweight to the sector.

Why this matters for rates: energy is keeping inflation sticky, and the Fed meets on September 15 to 16. Our view is that a quarter-point rate increase is now a real possibility, and markets are priced close to a coin flip. Whether the Fed hikes or holds with hawkish language, we expect higher volatility in both stocks and bonds around the decision. Long-term Treasury yields are already near their highest levels in years. We are keeping the energy overweight and our balanced approach, and we are not making big moves ahead of the meeting.

This section is general education and market commentary, not a recommendation to buy or sell any security.

2. Sold a property or a big stock position this year? Estimate the tax now [2]

A strong market and a hot housing market mean many families realized large gains this year, whether from selling an investment property, trimming a concentrated stock position, or cashing out company shares. The tax on those gains is not withheld the way wages are. If you wait until April 2027 to settle up, you may owe an underpayment penalty on top of the tax, even if you pay the full balance with your return, because the IRS calculates the penalty quarter by quarter.

Three things to know:

  • The third quarter estimated payment is due September 15, 2026, covering income from June 1 through August 31. The final 2026 installment is due January 15, 2027. If you miss September 15, paying as soon as you can still stops the penalty clock from that date forward.
  • Safe harbors. You generally avoid the penalty if you owe less than $1,000 after withholding and credits, or if your payments during the year cover at least 90% of this year's tax or 100% of last year's tax. If your 2025 adjusted gross income was above $150,000 ($75,000 if married filing separately), the prior-year safe harbor rises to 110%. Meeting last year's number is often the simplest target when this year's income is lumpy.
  • Withholding is the easier tool. The IRS treats tax withheld from a paycheck, pension, IRA distribution, or Social Security as if it were paid evenly through the year, no matter when it is actually withheld. That means you can raise your withholding rate for the last three months of 2026 and "back-fill" earlier quarters without a late-payment penalty. Estimated payments do not get that treatment; they count only when paid. Retirees taking a required minimum distribution before year-end can often direct a large withholding from that distribution and solve the whole problem in one step.

Also remember state taxes. Maryland, Virginia, and D.C. each have their own estimated payment rules, and a property sale in another state may require a nonresident return. If you sold this year, send us the closing statement or the trade confirmations and we will run a quick projection with your tax preparer before year-end.

This information is not intended to be a substitute for specific individualized tax advice. Please discuss your specific tax issues with a qualified tax advisor.

3. A 3% real yield on 30-year TIPS: the highest since 2008, and what it means for retirees [3]

Higher long-term rates are uncomfortable for existing bond holders, but they create an opportunity that has not existed in almost twenty years. Treasury Inflation-Protected Securities (TIPS) are U.S. Treasury bonds whose principal adjusts with the Consumer Price Index. Their "real yield" is what you earn above inflation. On September 8, the 30-year TIPS real yield was 2.96%, and it has hovered around 3% since August, the first time at that level since 2008. Long TIPS auctions in August cleared at a 2.973% real yield, the highest for that maturity since 2001.

Why it is worth a look: a 3% real yield for 30 years is a return above inflation that is backed by the U.S. Treasury and does not depend on stock prices or on the Fed's next move, if the bonds are held to maturity. Some commentators have calculated that a ladder of individual TIPS bought at today's yields could support a roughly 4.9% inflation-adjusted withdrawal for 30 years, compared with the classic 4% rule. We treat that math as an illustration, not a promise. It assumes the ladder is built all at once at current yields, held to maturity, and that nothing is needed after year 30.

Who might consider this, and who probably should not:

  • It may suit some people within about five years of retirement, or already retired, who want a floor of inflation-protected income for essentials such as housing, healthcare, and insurance, while keeping the rest of the portfolio invested for growth.
  • It is not a substitute for stocks for younger investors, and a pure TIPS ladder ends after the last bond matures. For most retirees, TIPS would be one piece of a diversified plan, not the whole plan.
  • The details matter. Individual TIPS held to maturity behave very differently from a TIPS mutual fund or ETF, which can lose value if real yields keep rising, as they did this summer. Real yields could also move higher from here, so buying now does not guarantee the best entry point. TIPS inflation adjustments are taxable each year even though the cash is not received until maturity, so placement in an IRA or other tax-deferred account is usually preferable. Ladders take work to build and maintain.

We are not suggesting anyone move money into TIPS on the strength of a headline. If an inflation-adjusted income floor is something you have wondered about, this is a reasonable time to run the numbers together and see whether, and how much, it fits your plan.

This section is general education and market commentary, not a recommendation to buy or sell any security.

If any of these topics are on your mind, I'm happy to help you think through your priorities and next steps. Just reply to this email.

Sources

  1. [1] Fortune, "Current price of oil as of September 8, 2026" (https://fortune.com/article/price-of-oil-09-08-2026/); J.P. Morgan Global Research, oil price forecast, noting Brent fell under $70 in mid-June (https://www.jpmorgan.com/insights/global-research/commodities/oil-prices); EIA Short-Term Energy Outlook, September 2026 (https://www.eia.gov/outlooks/steo/); Yahoo Finance, "FOMC September 2026 Odds for a Rate Hike Surpass 50%," September 8, 2026 (https://finance.yahoo.com/economy/policy/articles/fomc-september-2026-odds-rate-201618784.html); Federal Reserve H.15 Selected Interest Rates, September 8, 2026 (https://www.federalreserve.gov/releases/h15/); LPL Research Daily Market Update, August 19, 2026, "A Normalization Not a Crisis" (advisor distribution).
  2. [2] IRS, "Estimated Taxes" (https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes); IRS Publication 505, Tax Withholding and Estimated Tax (https://www.irs.gov/publications/p505); IRS Form 1040-ES 2026 instructions (https://www.irs.gov/forms-pubs/about-form-1040-es); Blumark, "September 2026 Tax Deadlines & Estimated Payments" (https://blumarktax.com/blog/september-2026-individual-tax-deadlines-and-strategies); Fraim, Cawley & Company, "Safe Harbor Rule: How to Avoid IRS Penalties in 2026" (https://fraimcpa.com/safe-harbor-rule-how-to-avoid-irs-penalties/).
  3. [3] Federal Reserve H.15 Selected Interest Rates, September 8, 2026 (https://www.federalreserve.gov/releases/h15/); Forbes, "Long-Term TIPS Gain Appeal As Real Yields Hit Multi-Decade Highs," August 24, 2026 (https://www.forbes.com/sites/timbeyer/2026/08/24/long-term-tips-gain-appeal-as-real-yields-hit-multi-decade-highs/); My Money Blog, "Long-term TIPS Yield now 3%; 4.9% Guaranteed 30-Year Withdrawal Rate" (https://www.mymoneyblog.com/long-term-tips-2026.html); TIPS Watch (https://tipswatch.com/); LPL Research Daily Market Update, August 21, 2026, on the 30-year TIPS reopening at 2.973% (advisor distribution); Kitces, Weekend Reading for Financial Planners, August 29 to 30, 2026 (https://www.kitces.com/).

Disclaimer

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Danni Shen, CFA®
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