Okay this is weird, I can no longer reproduce either. I wonder if it was some weird interaction between the steamdeck control scheme and the 1.06 changes that resolved itself when I restarted the whole game.
EDIT: Yeah playing even just a few more minutes I think the game didn't handle having a pre-existing run well so hard that it took both starting a new run AND restarting the game to fix it. I'm happy the game was just gaslighting me or whatever I prefer it to be working lol.