"If the Fed doesn't taper, I don't think that will be a shock at all, it's going to catch people by surprise and the bond market will absolutely rip. You'll see yields go right back down to 2 percent really fast," said Bill Smith, CEO and Senior Portfolio Manager at SAM Advisors.
Nikkei rallies 1.3%
Japanese equities closed at their highest levels since July 25 thanks to a weaker yen. The currency traded at 99.2 per dollar, well-off Monday's two-week high of 98.45, boosting the competitive advantage of exporters in overseas markets.
Industrial manufacturers led the gains with semiconductor maker Tokyo Electron increasing over 5 percent and robotics maker Fanuc higher by 2.4 percent.
Consumer technology stocks also rose with Pioneer higher by 9.7 percent, Panasonic rallying over 2 percent and and Sharp climbing 1.6 percent.
Shanghai 0.3% higher
China's benchmark index erased earlier losses thanks to rising optimism over Shanghai's planned free trade zone (FTZ). The index earlier fell below 2,184 points to hit its lowest level since September 9th.
(Read more: Is Shanghai's free trade zone really a game changer?)
Stocks linked to the FTZ extended their rally with Shanghai International Port higher by 3.6 percent and Shanghai Material Trading surging 10 percent after China's Ministry of Commerce said the FTZ will officially be launched on October 1.