Intellisense for generic parameterized string literal function arguments not working #55530

• 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