Houston, Texas, July 1, 2008 - The U.S. equity markets witnessed the largest one month decrease in market capitalization in over 7 years. Slight gains in short term securities and modest gains in the longer term U.S. bond markets were no match for the widespread losses among equities. The U.S investment grade capital markets ended June with a 3.54% drop to $32.0 trillion.

More than erasing the gains in April and May, the one month $1.3 trillion loss reduced the value of the equity markets by 8.11%. This is the largest loss by dollar value since the nearly $1.5 trillion loss in February, 2002. Nearly all sectors were down but the hardest hit were the Finance, Insurance,& Real Estate sector, which lost $476 billion to decrease by over 16%, and the Manufacturing & Wholesale Trade sector, which dropped nearly $420 billion in a 9.7% loss. The only bright spot was a 2.5% gain in the Mining & Construction sector. June closed with the equities at $14.9 trillion, a 46.55% share of the U.S. investment grade capital markets.

Liquidity securities barely changed, increasing 0.44% to $7.2 billion to account for 22.52% of the U.S. investment grade capital markets. Cash instruments were helped out by a $128 billion increase in the size market for federal agency discount notes which more than offset a $98 billion decrease in the market for certificates of deposit as well as $26 billion decrease in the market for Treasury bills. The Federal Reserve’s continued sell-off of Treasury bills brought its holdings to just 2% of the total par amount of outstanding Treasury bills, one fifteenth the historical level.

Long term investment grade bond markets saw a $125 billion increase for a 1.28% gain to $9.9 trillion. A large portion of the increase was due to federal agency bonds and notes no longer trading to their call date moving from a liquidity classification to a bond classification. This brought long term debt to a 30.92% share of the U.S. investment grade capital markets. Long term U.S. Treasury securities, federal agency securities, and GSE issued mortgage-backed securities accounted for the gain as they combined to overcome a $52 billion decrease in investment grade corporate bonds. A year ago the $33.2 trillion U.S. investment grade capital markets had equity, liquidity, and bond market proportions of 55.28%, 27.51%, and 17.22%.

Dorchester's flagship index, CPMKTS^sm The Capital Markets Index, is carried on The American Stock Exchange under the symbol CPMKTS, with updates every 15 seconds. The Amex also publishes the component indexes: CPMKTSE^sm The Capital Markets Equity Index, CPMKTSB^sm The Capital Markets Bond Index and CPMKTSL^sm The Capital Markets Liquidity Index.

About Dorchester Capital Management LLC.
Dorchester Capital Management LLC is a Houston-based company principally focused on designing financial products for the professional investment community. Dorchester’s unique approach to processing, organizing and standardizing capital markets data from the broadest variety of sources gives it a superior ability to help clients with the fundamental risk analysis questions of asset allocation and benchmarking. For additional information, please visit the company's Web site at www.cpmkts.com.

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