Interest rates have swung wildly over the past two years in response to inflation, economic concerns, and market volatility. After falling as low as 3.3% earlier this year, the 10-year U.S. Treasury is now yielding around 4.2%, back to where it was roughly a year ago.

While 2023 has been a better year for bonds after last year's bear market, rising interest rates over the past three months have acted as a headwind. The U.S. Aggregate bond index has gained 0.6% this year, down from a peak return of 4.2% in April.

For long-term investors, knowing the difference between what can and cannot be controlled is the key to both financial success and peace of mind. While all investors would like to believe they can predict or even control the direction of the market, experience teaches us that this is difficult to do.

Despite the economic uncertainty of the past year, everyday individuals and households have been resilient. Consumer spending has remained steady in the face of high inflation, rising interest rates, housing market challenges, and layoffs in sectors such as tech.

Financial markets have pulled back in recent weeks due to factors such as rising interest rates and uncertainty in China. So far in August, the S&P 500 has declined 4.8% while the Nasdaq, which consists primarily of technology stocks, has fallen 7.4%. However, this is in the context of a strong rally from March through July during which the S&P 500 gained over 19% and the Nasdaq almost 29%. What's driving these market swings and what perspective do long-term investors need to stay balanced?