The problem is due to Notepad broken encoding detection algorithm. For some reason it assumes that the file is encoded in UTF16, where the byte sequence [49 32] (characters '1' and ' ' in ansi and UTF8) indeed represents the character '‱'. Note that simply adding a space, ' ', before your sequence of numbers completely change the behaviour of Notepad's detection algorithm. With a space at the start, it correctly interprets the file as ANSI or UTF8.
As Stephen said don't use notepad. It's broken (and very limited in functionality). A good alternative is the open source Notepad++. You can also simply use matlab's editor.
edit: another option would be to save your output.txt as UTF16, which would then be read correctly by notepad, particularly, if you insert a BOM at the beginning. However, while matlab can read/write UTF16, it's not documented so there may be some edge cases where it doesn't work appropriately. Additionally, notepad is probably the only software that tends to assume UTF16, everything else tends to assume UTF8 by default, so the display will look odd in almost every other text editor (matlab's included).