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

• VS Code Version: 1.86.0
• OS Version: 10.0.19045

Steps to Reproduce:

1. Add custom color for your terminal panel
2. Add opacity to the color

Example:

 "workbench.colorCustomizations": {
     "panel.background": "#171717[00-99]"
 }

Before:

After:

Looks like each letter in the prompt gets overriden with its own default background color and they overlay eachother if the background of the panel's color has opacity.