• VSCode Version: 1.3.1
• OS Version: Windows 10

Steps to Reproduce:

1. Bind bash.exe path to integrated shell ("terminal.integrated.shell.windows": "C:\Windows\sysnative\bash.exe")
2. Open terminal by Ctrl-Shift-~
3. Type a command: echo hello world
4. Use up arrow to find the command in history (doesn't work)

This works in the new stand-alone bash terminal. This also works on a mac. Just not vsc.