Editor is not adding non-breaking linespaces

When I enter space or hit enter few times along with gibberish you would expect to see the html formatted like this:

<p>asd</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>asd</p>
<p>asd</p>
<p>asd&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; adasd</p>

Instead I am getting:

asd

�

�

asd

asd

asd����� adasd

Does anyone know what could be causing these strange symbols? It appears that &nbsp; are not being added and instead just a space is being put in that is being visualized as these strange question mark characters.