Intellisense for generic parameterized string literal function arguments not working

From @njgraf512 on July 31, 2018 22:5

• VSCode Version: 1.26.0-insider
• OS Version: MacOS 10.12.6

Steps to Reproduce:

1. Enter the following into a TS file:

const myObj =  {
  foo: 'Foo',
  bar: 'Bar',
}

function myFunc<T>(obj: T, key: keyof T) {
  return obj[key];
}

myFunc(myObj, 'f')

2. Observe that once you begin typing the f of string literal foo for the function's second argument, the tooltip switches from suggesting "foo" | "bar" to never:

Good:

Bad:

3. Also, triggering intellisense with control+space does not suggest foo or bar:

Does this issue occur when all extensions are disabled?: Yes/No
No

Copied from original issue: Microsoft/vscode#55530

Start by reproducing the example in a TypeScript file using the reported VS Code and TypeScript context, then inspect the IntelliSense behavior for the second generic function argument. Done means the tooltip continues to show "foo" | "bar" while typing and manual IntelliSense invocation suggests both literals.