You are right, if the stress exceeds yield your fatigue analysis won't be worth anything (at least not in those regions of the model). Have you achieved mesh independence on your model here (smaller element size yielding the same stress results)? Have you determined whether the high stress you are seeing is a singularity?
Generally, all the bolt holes and bolt threads have to be symmetry when you have torqued. But the image file shows that the concentrated stress is only at single thread and at the end of the bolt. Please do check that once. Because, as Ryan Dark said that there are singularity points.
I hope your yield stress might reduce and will get success in your answer.
Naga Ranjithkumar A