Stage Manager stealing focus when switching from Safari

I have Safari running in fullscreen in its own desktop, and another application running on the main desktop in regular window. If I use the app - in this case iTerm2, but it happens with every other program, like Finder - and then switch to Safari regardless of using cmd+arror or cmd+tab, then the previous program is not in focus [1].

I have run swift script [3] to display which app is in focus and it revealed that WindowManager is in focus. If I disable Stage Mananger, then this behaviour is not exhibited and the focus returns to iTerm2 [2].

This started happening after update to Sequoia.

[1]

Switching from Safari to iTerm2 with Stage Manager running

[2]

Switching from Safari to iTerm2 with Stage Manager disabled

[3] The script is here: https://gist.github.com/dagronf/b71315a999678aece610838497fe9d0e