The Federal Reserve may be hard pressed to rationalize another interest rate cut at its next meeting in September because the economy is "a little better than people realize," CNBC's Jim Cramer said Tuesday.
"The hawks on the Fed are going to be gunning for no more rate cuts, which is obviously not what the market wants," said Cramer, after a volatile last week on Wall Street gave way to a three-session rebound.
In early trading Tuesday, Wall Street turned lower as bond yield resumed their slide. But the Dow was able to erase some of those losses, led by a 4% jump in shares of Dow component Home Depot.
On Wednesday, the Dow Jones Industrial Average plummeted 800 points, or 3%, with bond yields falling to multiyear lows and the 10-year Treasury yield inverting and trading for short time lower than the 2-year yield.
That inversion, while brief, has historically signaled a recession the horizon.
Against a backdrop of lower market rates and concerns about global economic growth due the U.S.-China trade war, the market pointed to a 100% probability of another Fed policy rate cut next month.
Last month, central bankers reduced rates for the first time in more than a decade. The 0.25% move dropped rates to a target range of 2% to 2.25%.
But the Fed tends to favor shallower moves. In fact, the market sees a less than 3% chance of a September rate cut bigger than 0.25%.