The strength of the consumer sector and Warren Buffett's confidence in bank stocks are key reasons not to overreact to the yield curve inversion, CNBC's Jim Cramer said Wednesday.
The yield on the 10-year Treasury note fell below that of the 2-year note early Wednesday. This inversion has historically been an early indicator of an upcoming recession. The yield on 30-year U.S. bonds also fell to a record low.
However, Cramer said on "Squawk Box" that strong mortgage applications and Buffett's faith in the banking sector — which investors are typically wary of when interest rates are low — means that this inversion may not be as significant as previous ones.
"Longer term, am I going to bet against Buffett because the [algorithms] tell me to sell the stuff? I can't. Particularly when the consumer's taking advantage of the rates, and I look at the S&P top 50 companies, and it's very hard to find ones that are really hurt by this," Cramer said.
Buffett's Berkshire Hathaway has large positions in several financial firms, including American Express, Bank of America, Goldman Sachs and J.P. Morgan, according to his most recent shareholder letter.
In a later interview, Cramer cited Germany's negative-yielding government bonds and the lack of a recession there as an example of why the market doesn't need to sell off.
"Why isn't that market down like 25% or down 10%? The answer is that at a certain point it becomes ennui about even inversion because there's lots of companies that are going to do very well," Cramer said.
This is the first time these two bond yields have been inverted since 2007. The market opened down Wednesday, with the Dow Jones Industrial Average off more than 400 points in early trading.
Correction: CNBC's Jim Cramer was speaking Wednesday. An earlier version misstated the day.