[Q] git rebase -i -p conflicts with squash

If I run git rebase --interactive with --preserve-merges option and
select "squash" for one of the commit, the rebase process fails with
the message "Refusing to squash a merge:
5e775c536654640c173ba71a0af7e84bf8bc618a". However the neither commit
participating in the squash is a merge commit. Even more, there are no
merge commits in the repository at all.

From my limited understanding of squash operation, it should fail only

if one of squashed commits is a merge commit, but it should be
possible to squash non-merge commits without problem as it looks like
quite safe and local operation (and I might want to preserve merges
that happened after squashed commits). Is it the current behaviour a
bug or a feature?

Constantine