Unexpected incompatible type with string literal type

[vilicvane]

TypeScript Version: nightly (2.4.0-dev.20170612)

Code

interface X {
    type: 'x';
    value: string;
}

interface Y {
    type: 'y';
    value: 'none' | 'done';
}

function foo(bar: X | Y) { }

foo({
    type: 'y',
    value: 'done',
});

Expected behavior:

No error.

Actual behavior:

Argument of type '{ type: "y"; value: string; }' is not assignable to parameter of type 'X | Y'.
  Type '{ type: "y"; value: string; }' is not assignable to type 'Y'.
    Types of property 'value' are incompatible.
      Type 'string' is not assignable to type '"none" | "done"'.

[opavader]

temporary workaround in #11465

[RyanCavanaugh]

Going to track this at #16457