[BUG] Realtime Thinking no longer visible

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 Code extension: 2.1.140 && 2.1.139 (darwin-arm64)
Model: Opus 4.7 (1M context)
Settings: showThinkingSummaries: true, /effort max
Issue: Thinking expand arrow no longer renders in the chat UI
Tried: Reload Window, Reverting to prior version, Restart Extension Host — none

What Should Happen?

I should be able to see, in real time, the thinking processes that are happening

Error Messages/Logs

N/A

Steps to Reproduce

Ask Claude to think about something for 10 seconds.
See Thinking... but no option to view the thinking process.

I even had some remnants of conversations where I was still able to see the thought process, but this morning, when posed Identical questions, there was no way to see the reasoning.

Claude Model

Opus

Is this a regression?

Yes, this worked in a previous version

Last Working Version

2.1.139

Claude Code Version

2.1.139

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

VS Code integrated terminal

Additional Information

VS Code extension

  "env": {
    "CLAUDE_CODE_EXTRA_BODY": "{\"thinking\":{\"type\":\"adaptive\",\"display\":\"summarized\"}}"
  }