podman: rootless `podman run` with :Z results into "relabel failed"

Is this a BUG REPORT or FEATURE REQUEST? (leave only one on its own line)

/kind bug

Description

I am mounting my cwd into rootless container using :Z and podman errors out with a message:

relabel failed "/home/tt/g/user-cont/packit": operation not permitted

The reason I am opening this issues is that it works fine for my colleague with the exactly same setup. Hence I am confused whether this is actually supposed to work or not. CC @jpopelka

$ ls -Z -d .
system_u:object_r:container_file_t:s0:c240,c746 .

$ podman run --rm -ti -v $PWD:/src:Z fedora:29 bash
relabel failed "/home/tt/g/user-cont/packit": operation not permitted

$ podman run --rm -ti -v $PWD:/src fedora:29 bash
[root@ea90caf155f2 /]# exit

Output of podman version:

Version:       1.0.0
Go Version:    go1.11.4
Git Commit:    "49780a1cf10d572edc4e1ea3b8a8429ce391d47d"
Built:         Mon Jan 14 21:38:17 2019
OS/Arch:       linux/amd64