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mpc: 5 A second possible explanation was that the risk premium had increased. The expected volatility of the major equity indices implied by options prices had increased, possibly reflecting recent increases in historical volatility. Spreads on investment-grade and high-yield corporate bonds had continued to widen, and were now on average around 30 basis points and 140 basis points respectively above their March lows. That suggested some combination of a rise in perceived corporate default risk and greater risk aversion. The change was not surprising given the unusually compressed spreads earlier this year. The rise in spreads had helped partly to offset the impact of the fall in longer-term yields on the cost of capital to companies.