The satin stitch will cause the fabric to do that because it is trying to fit in so much thread in such a small area, if you go to a zigzag that should stop.
Originally Posted by
Peckish
I had the same problem you did and solved it by not satin-stitching anymore. Lol not much help, am I? I changed to using a blanket stitch or a small, narrow zigzag. I used satin-stitch on a wall hanging, and not only did it "tunnel", but it also warped the quilt so it doesn't hang flat on the wall. Phooey.