Dubai returns to the fixed-income sphere for the first time in more than a year after raising about $2 billion from dirham and dollar-denominated Islamic bonds.

Confidence in the emirate had run aground earlier this year as investors bet on Dubai's state-linked entities not being able refinance debt. So far, this year it has met all its obligations and with the fresh issue booking about $6.5 billion from regional and international investors, Dubai's doomsday scenario appears to be vanishing. 

With much of the United Arab Emirates' oil coming from the largest of the emirates Abu Dhabi, investors have flocked to the capital this year as appetite for good emerging market debt revives. The spread between Abui Dhabi and Dubai widened at its peak to over 500 basis points in February, but Dubai government efforts to restore confidence -- kickstarted by the UAE central bank buying $10 billion of its bonds -- has helped spreads narrow to about 200 basis points.

Dubai still has a long way go. The next test will be property developer Nakheel resolving its $3.5 billion Islamic bond maturing on Dec. 14 and then a raft of debts in 2010.....but as Harold Wilson once said, "A week's long time in politics."  

You know things are bad on financial markets when an investment research note starts talking about Dante’s visit to the nine circles of Hell with tormented lustful souls and gluttons living in filthy slush.

In the case of State Street Global Markets’ latest report, however, there is a more direct link than simple hyperbole about the way investors are feeling. The firm recently had a chat with former U.S. Treasury Secretary Larry Summers who defined what he saw as the five vicious circles of the current financial crisis.

It goes like this:

Circle One: House prices fall in value, putting some people into negative equity and leading some to default on mortgages. Foreclosures further erode asset values.

Circle Two: Falling asset prices erode bank capital, making banks more hesitant to lend, leading to further asset price falls and lower capital levels.

Circle Three: A slowing real economy reduces financial asset prices, leading to less lending and less investment. This causes the economy to slow further.

Circle Four: A slowing economy means less demand for goods and services, leading to lower employment and even less demand.

Circle Five:  Confidence in the financial system breaks down. State Street says that investment flows and moves on global stock markets clearly suggest this is where the financial world is at the moment.

It is worth remembering, perhaps, as investors stare into the inferno, that Dante did come back from his visit to Hell’s circles. But then again, he did not go straight to Heaven. There were seven terraces of Purgatory to manoeuvre through first.

As a rule, women are more pessimistic than men. The pattern has been among the most consistent across years of tracking U.S. consumer sentiment in the Reuters/University of Michigan survey. Since the survey began tracking gender differences in outlook in January 1978, women have shown a higher sentiment reading just twice.

Things changed this month.

The long-term trend continued in May as overall consumer sentiment dropped to a 28-year low. Yet the mood among women improved slightly whereas sentiment for men soured for a fourth consecutive month, dropping to the lowest since 1980 (second graphic above). Moods darkened for men by the biggest margin in nearly three years, since the aftermath of Hurricane Katrina.

What’s behind it? One factor at play is a diverging view of personal financial situations. Women in the survey indicated their situations improved modestly this month from April, albeit from a 27-year low. For men, however, May marked the seventh straight month of worsening finances. In fact, men rated their finances in the worst shape since the survey began tracking the differences between the genders.