[BUG]

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

Claude fails to load public settings.json and public Claude.md with this error Invalid or malformed JSON if the files are symlinked.

What Should Happen?

Claude should be able to read symlinks for both settings.json and Claude.md

Error Messages/Logs

Invalid or malformed JSON

Files with errors are skipped entirely, not just the invalid settings.

Steps to Reproduce

1. Move both settings.json and Claude.md from the $HOME/.claude/ to any directory maybe

``` bash
mkdir -p $HOME/.config/claude/
mv $HOME/.claude/Claude.md \
$HOME/.claude/settings.json \
$HOME/.config/claude/

2. Symlink the files from the new location to the claude directory.
```bash
ln -s $HOME/.config/claude/Claude.md $HOME/.claude/Claude.md
ln -s $HOME/.config/claude/settings.json $HOME/.claude/settings.json

It would be even better to support XDG Base Directory specification as in this issue https://github.com/anthropics/claude-code/issues/1455

Claude Model

None

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

v2.0.76

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_