Catalina Security Update today 26 May 2022 → Mac OS no longer recognized most (not all) keyboard maestro and other app keyboard shortcuts.
Problem
update enabled Secure Input
Secure Input definition (from KM Wiki)
Secure Input Problem aka Secure Keyboard Entry Problem
Mac OS X will not let applications watch the keyboard when you are in a password field (to prevent hackers getting hold of your passwords). However, the system can sometimes get into a state where it thinks it is permanently in a password fields.
Solution
click on KM status icon → see if secure input is enabled → see culprit all in (), in this case terminal.
disable (uncheck) secure keyboard entry in Terminal app