diff --git a/packages/coding-agent/src/main.ts b/packages/coding-agent/src/main.ts
index 3a7a96f9..ce4875e8 100644
--- a/packages/coding-agent/src/main.ts
+++ b/packages/coding-agent/src/main.ts
@@ -1,4 +1,4 @@
-import { Agent, ProviderTransport } from "@mariozechner/pi-agent";
+import { Agent, ProviderTransport, type ThinkingLevel } from "@mariozechner/pi-agent";
 import { getModel } from "@mariozechner/pi-ai";
 import chalk from "chalk";
 import { readFileSync } from "fs";
@@ -227,6 +227,13 @@ export async function main(args: string[]) {
 			console.log(chalk.dim(`Loaded ${messages.length} messages from previous session`));
 			agent.replaceMessages(messages);
 		}
+
+		// Load and restore thinking level
+		const thinkingLevel = sessionManager.loadThinkingLevel() as ThinkingLevel;
+		if (thinkingLevel && thinkingLevel !== "off") {
+			agent.setThinkingLevel(thinkingLevel);
+			console.log(chalk.dim(`Restored thinking level: ${thinkingLevel}`));
+		}
 	}
 
 	// Start session
diff --git a/packages/coding-agent/src/session-manager.ts b/packages/coding-agent/src/session-manager.ts
index 21f5a791..df084a3a 100644
--- a/packages/coding-agent/src/session-manager.ts
+++ b/packages/coding-agent/src/session-manager.ts
@@ -19,6 +19,7 @@ export interface SessionHeader {
 	cwd: string;
 	systemPrompt: string;
 	model: string;
+	thinkingLevel: string;
 }
 
 export interface SessionMessageEntry {
@@ -115,6 +116,7 @@ export class SessionManager {
 			cwd: process.cwd(),
 			systemPrompt: state.systemPrompt,
 			model: `${state.model.provider}/${state.model.id}`,
+			thinkingLevel: state.thinkingLevel,
 		};
 		appendFileSync(this.sessionFile, JSON.stringify(entry) + "\n");
 	}
@@ -157,6 +159,27 @@ export class SessionManager {
 		return messages;
 	}
 
+	loadThinkingLevel(): string {
+		if (!existsSync(this.sessionFile)) return "off";
+
+		const lines = readFileSync(this.sessionFile, "utf8").trim().split("\n");
+
+		// Find the most recent session header with thinking level
+		let lastThinkingLevel = "off";
+		for (const line of lines) {
+			try {
+				const entry = JSON.parse(line);
+				if (entry.type === "session" && entry.thinkingLevel) {
+					lastThinkingLevel = entry.thinkingLevel;
+				}
+			} catch {
+				// Skip malformed lines
+			}
+		}
+
+		return lastThinkingLevel;
+	}
+
 	getSessionId(): string {
 		return this.sessionId;
 	}
diff --git a/packages/coding-agent/src/tui/assistant-message.ts b/packages/coding-agent/src/tui/assistant-message.ts
index 95529012..0f87fe50 100644
--- a/packages/coding-agent/src/tui/assistant-message.ts
+++ b/packages/coding-agent/src/tui/assistant-message.ts
@@ -41,9 +41,9 @@ export class AssistantMessageComponent extends Container {
 				this.contentContainer.addChild(new Markdown(content.text.trim(), undefined, undefined, undefined, 1, 0));
 			} else if (content.type === "thinking" && content.thinking.trim()) {
 				// Thinking traces in dark gray italic
-				// Apply styling to entire block so wrapping preserves it
+				// Use Markdown component because it preserves ANSI codes across wrapped lines
 				const thinkingText = chalk.gray.italic(content.thinking);
-				this.contentContainer.addChild(new Text(thinkingText, 1, 0));
+				this.contentContainer.addChild(new Markdown(thinkingText, undefined, undefined, undefined, 1, 0));
 				this.contentContainer.addChild(new Spacer(1));
 			}
 		}
diff --git a/packages/coding-agent/src/tui/tui-renderer.ts b/packages/coding-agent/src/tui/tui-renderer.ts
index 7ab024fc..8e9d9564 100644
--- a/packages/coding-agent/src/tui/tui-renderer.ts
+++ b/packages/coding-agent/src/tui/tui-renderer.ts
@@ -98,6 +98,7 @@ export class TuiRenderer {
 		// Setup UI layout
 		this.ui.addChild(new Spacer(1));
 		this.ui.addChild(header);
+		this.ui.addChild(new Spacer(1));
 		this.ui.addChild(this.chatContainer);
 		this.ui.addChild(this.statusContainer);
 		this.ui.addChild(new Spacer(1));
@@ -377,11 +378,10 @@ export class TuiRenderer {
 				// Apply the selected thinking level
 				this.agent.setThinkingLevel(level);
 
-				// Show confirmation message with padding and blue color
-				this.chatContainer.addChild(new Text("", 0, 0)); // Blank line before
-				const confirmText = new Text(chalk.blue(`Thinking level set to: ${level}`), 0, 0);
+				// Show confirmation message with proper spacing
+				this.chatContainer.addChild(new Spacer(1));
+				const confirmText = new Text(chalk.dim(`Thinking level: ${level}`), 1, 0);
 				this.chatContainer.addChild(confirmText);
-				this.chatContainer.addChild(new Text("", 0, 0)); // Blank line after
 
 				// Hide selector and show editor again
 				this.hideThinkingSelector();