When I use Cmd-1 in most apps the desired action doesn't happen (for example first tab in safari, or inbox in OmniFocus). In most apps, I just get a little key not allowed 'bip' noise, however if I use it in a text editor, it basically does Alt-shift right arrow, then Ctrl-B or something similar. In this text box I get markdown for bold '**', same in drafts.
I've looked through my macros and I'm not using cmd-1 in keyboard maestro, but when I turn off the KB engine, Cmd-1 works as normal!
Well that's very odd, because it doesn't show up as a last used macro, however as soon as I turn KM engine off, CMD-1 works as normal!
It also doesn't show up using key-cue, in system preferences, cheatsheet, and I've checked BTT and there's no keyboard shortcuts in there. Hmm. I'll check the shortcut app, but still no idea why turning of KM engine would affect it.
I think the issue was, for future searchers, that my quick macro was set to ⌘1, so it wasn't showing up as a macro, but was still being 'hijacked' as such, by keyboard maestro. Bad choice of words perhaps since it was doing exactly what I asked etc, but nonetheless, it appears that was the confusion. I've set my quick macro shortcut to a lesser used key combination.