Operating system: Windows-10-10.0.18362 64 Bits
Graphics card: GeForce GTX 1070/PCIe/SSE2 NVIDIA Corporation 4.5.0 NVIDIA 432.00
Broken: version: 2.81 (sub 16), branch: master, commit date: 2019-11-06 20:48, hash: rB85637311c28f
Also broken: Blender 2.80 release
Worked: Blender 2.79b release
When you transform an object, Blender fails to update objects that depend on that object for purposes of dynamically bound mesh deform modifiers. This affects only viewport display; render displays properly (probably updating everything prior to rendering anyways?)
This also appears to be true with non-dynamically bound mesh deforms, although it's unclear whether regular binds should depend on transformation space, or if the fact that they do is a (different) bug-- I just figure regular mesh deforms operating in different spaces than their targets is unsupported.
Exact steps for others to reproduce the error
See attached .blend, made in 2.80 release, which demonstrates the bug and the workaround:
Cube at origin is being mesh deformed by Icosphere in wire display over it. Move Icosphere in object mode. Cube fails to update. (Enter then exit edit mode on Icosphere to trigger Cube to update and see how your object level transformation affected the dynamic mesh deform.)
Cube.001 and Icosphere.001 demonstrate the workaround. By parenting Icosphere.001 to a bone that triggers update of Cube.001 via a meaningless armature modifier, you can manipulate Icosphere.001 through the bone for real-time updating of the effects of your transformation.