The five-year Treasury sale followed a poor $26 billion two-year note auction on Monday. The Treasury will complete this week's coupon-bearing supply sale with a $28 billion seven-year debt auction on Thursday.
The ratio of bids to the $34 billion five-year debt offered was 2.27, down from 2.29 at the previous five-year auction in June.
The bid-to-cover ratio, which measures auction demand, was the weakest since 1.93 in July 2009. Investors have been reluctant to bid for Treasuries in case Fed policy makers at the conclusion of their meeting on Wednesday hint at a rate increase sooner than anticipated, analysts said.
Fund managers, foreign central banks and other direct bidders bought 53.64 percent of the five-year note supply, down from 57.21 percent at the prior auction in June.
It was their smallest share since January. With the drop in indirect bidder purchases, primary dealers - the top 23 Wall Street firms that do business directly with the Fed - ended up of 41.63 percent of the five-year supply.
That was up from 39.06 percent in June and their largest share since August 2015.
Small bond dealers and other direct bidders bought 4.73 percent, rebounding from a three-year low of 3.73 percent in June.
The yield on the latest five-year Treasury issue was 1.180 percent, down from 1.218 percent in June and the lowest since February.