Edit: Figured it out. I posted answer.
I have a KY040 rotary encoder hooked up to a 5V source, and the oscilloscope hooked up to the CLK output. When I turn the encoder, CLK goes low as you can see at arrow A in the image. When the turn is done, it goes to ~1.1V which you can see at arrow B, it then immediately begins falling back to low over about 200ms. It stays low about 200ms and then finally goes high again. I'd expect it would just go back to 5V at arrow B and that'd be it. Any ideas what might be causing this? I'm thinking the encoder is simply damaged.