diff --git a/demo/runners/support/agent.py b/demo/runners/support/agent.py
index 0aa7f995ed..45e3b317bd 100644
--- a/demo/runners/support/agent.py
+++ b/demo/runners/support/agent.py
@@ -662,7 +662,18 @@ def handle_output(self, *output, source: str = None, **kwargs):
             color = self.color or "fg:ansiblue"
         else:
             color = None
-        log_msg(*output, color=color, prefix=self.prefix_str, end=end, **kwargs)
+        try:
+            log_msg(*output, color=color, prefix=self.prefix_str, end=end, **kwargs)
+        except AssertionError as e:
+            if self.trace_enabled and self.trace_target == "log":
+                # when tracing to a log file,
+                # we hit an issue with the underlying prompt_toolkit.
+                # it attempts to output what is written by the log and can't find the
+                # correct terminal and throws an error. The trace log record does show
+                # in the terminal, so let's just ignore this error.
+                pass
+            else:
+                raise e
 
     def log(self, *msg, **kwargs):
         self.handle_output(*msg, **kwargs)
diff --git a/demo/runners/support/utils.py b/demo/runners/support/utils.py
index 63982d4437..0056686fbf 100644
--- a/demo/runners/support/utils.py
+++ b/demo/runners/support/utils.py
@@ -113,7 +113,12 @@ def output_reader(handle, callback, *args, **kwargs):
     for line in iter(handle.readline, b""):
         if not line:
             break
-        run_in_terminal(functools.partial(callback, line, *args))
+        try:
+            run_in_terminal(functools.partial(callback, line, *args))
+        except AssertionError as e:
+            # see comment in DemoAgent.handle_output
+            # trace log and prompt_toolkit do not get along...
+            pass
 
 
 def log_msg(*msg, color="fg:ansimagenta", **kwargs):