I looks llike two ends of yarn tied together. It's annoying but not uncommon. When I come to these knots, I cut them out and overlap the yarn ends for about 3-4 inches, knit the next stitch with two strands held together and then weave in the ends later. Jan's idea of splitting the yarn into two strands and weaving them in separately is a good one. It'll hide the bulk.
Absolutely yummy color yarn!