Version

2.6.11

Reproduction link

https://gist.github.com/aimozg/c073eea5a55062e3dcd8f887a8567807

Steps to reproduce

Run example.js in Node.

Alternative steps/Detailed explanation:

1. Setup Vue template compiler with whitespace: 'condense'. (it is default for vue-cli).
2. Render template with   entity, e.g. <p>a&nbsp;b</p>
3. Inspect template for actual non-breaking space character

What is expected?

  entity rendered as non-breaking space character; example.js output should contain

---- whitespace: condense
// code
NBSP FOUND

What is actually happening?

  entity is rendered as plain space, example.js output contains

---- whitespace: condense
// code
NBSP NOT FOUND

The whitespace is stripped by this compiler code:

if (!inPre && whitespaceOption === 'condense') {
  // condense consecutive whitespaces into single space
  text = text.replace(whitespaceRE, ' ')
}

and " "s are replaced by "\xA0"s with entity decoder earlier.

Related issues is #10485

Suggestion:

Narrower whitespaceRE regexp, like /[ \t\r\n]+/g.