China is moving ahead "rapidly" with its version of a central bank-issued digital currency and the Fed looks to be prioritizing development and moving forward with urgency to produce one in the U.S. as well.

Why it matters: Digital currencies would provide a number of new policy tools to help stimulate the economy, including allowing Congress to send money more quickly and efficiently to Americans or facilitating direct transmissions from the Fed to consumers.

What's happening: Spending patterns by the unemployed and others who received funds through the CARES Act and private company progress on digital currencies "has intensified calls for [central bank digital currencies] CBDCs to maintain the sovereign currency as the anchor of the nation's payment systems," Fed governor Lael Brainard said in a speech earlier this month.

• "Moreover, China has moved ahead rapidly on its version of a CBDC."

Watch this space: Separate House and Senate bills have emerged this year proposing the creation of digital currencies.

The big picture: Congress' inability to pass additional economic stimulus could put more pressure on the Fed to hold up the economy, and its current tools are ill-suited to do so.

• The Fed's Main Street Lending Program, its most high-profile effort to directly help individual Americans and smaller businesses, has provided less than one half of 1% of its $600 billion mandate.
• The growing talk of the K-shaped recession in the U.S. has led to concerns that the Fed is driving income and wealth inequality, and even prompted a Senate bill to give the Fed a third mandate to reduce inequality.

The intrigue: A digital currency could also help the Fed implement monetary policy by setting interest rates on consumers' accounts holding the digital currency — analysts say this also could be a more efficient way for the Fed to institute negative interest rates to boost consumption and inflation.

Between the lines: China already is far ahead of the U.S. and much of the developed world in mobile payments, and a new digital currency could provide another avenue to challenge the dollar's supremacy as the world's funding currency.

• Chinese authorities have said they plan to test a CBDC in multiple cities on the mainland this year and could unveil a digital renminbi trial in Hong Kong and Macau as well.

What's next: The Fed could provide some hints on the next steps in developing a digital currency at its annual Jackson Hole Symposium, which is set to kickoff virtually on Thursday.

Goldman Sachs expects almost a quarter of those who have been laid off since April to become permanent job terminations. (Bloomberg)

New reports of U.S. coronavirus cases have stayed below 50,000 for eight straight days as states that experienced a surge in infections continue to report lower numbers. (WSJ)

UN data show China supplied 83% of the four major types of PPE that medical staff wear — masks, gowns, protective clothing, and glasses — in May, up from 59% in January. (Nikkei)

Early readings of IHS Markit's manufacturing and services purchasing managers' indexes rose by more than expected in August, showing continued improvement in expectations and output among U.S. firms.

By the numbers: The manufacturing index rose by 2.7 points month over month to 53.6, continuing the series' rise from 50.9 in July.

• The services index rose by the most since March 2019, beating expectations and jumping to 54.8.
• (50 is the dividing line between growth and contraction.)

What it means: Companies in both the manufacturing and services sectors saw a resurgence in new orders, the reports showed.

• "The rate of job creation accelerated among service providers, with manufacturers indicating the first rise in staff numbers since February," Markit said in its report.
• “Total new business rose for the first time since February and at a solid rate. Manufacturing firms registered a steeper expansion in new order inflows than in July, while service providers signaled a renewed increase in sales."

Yes, but: PMI numbers only measure month-to-month change and whether businesses say things got better or worse. The surveys do not account for the amount of change, so they don’t show how much ground still needs to be made up after steep declines that began in March.

Existing home sales rose by 25% in July over June's red-hot pace, the biggest monthly gain on record for the data series that goes back to 1968.

Why it matters: Residential home sales have been rising at a breakneck pace since most nationwide lockdowns ended in May.

• July's record 25% increase follows a 21% monthly increase in June.
• There were 5.86 million homes sold during the month, and sales hit the highest rate since December 2006.

Why you'll hear about this again: The median sale price of a used home rose to $304,100 in July, the first time the metric has ever risen over $300,000.

• Home prices have risen 8.5% year over year.
• The median price of a used home in June was $294,500, up from $283,600 in May.

The Census Bureau released new phase two data from its Small Business Pulse survey last week, showing some of the sectors most impacted by the coronavirus pandemic.

What they found: Hiring and rehiring have slowed and businesses now broadly say they expect recovery from the pandemic to take much longer than previously thought.

• 44% of respondents expect recovery will take six months or longer and 10% say they don't ever expect to recover. This compares to 31% who said at least six months in the first week of the survey and 6% who said never.
• But more small firms say the pandemic will have a moderate negative impact on business than a large negative impact (45% vs. 34%) compared to the first week of the survey (39% vs. 51%).

Details: The survey is a collection of "high-frequency, detailed information on the challenges small businesses are facing during the Coronavirus pandemic as well as their participation in federal programs such as the Paycheck Protection Program," according to the Census Bureau.

• It includes information about "small business operations and finances, requests and receipt of assistance, and measures of overall well-being and expectations for recovery. Data is available by sector and state for the fifty most populous Metropolitan Statistical Areas."