Is this overreacting?!? Need everyone’s thoughts!

My brothers girlfriend is one of those people who doesn’t think before she speaks. She’s very brash and says the first thing that comes to her mind, regardless of the impact her words have on someone.

When we were at a family party she went up to my pregnant fiancé and said “I forgot to tell you what happened when I was pregnant. When I was in ACME some crazy woman came up to me, pointed to my belly and said ‘your baby is going to die.’” My fiancé kind of just shook her head and my brothers girlfriend started pointing to my fiancé’s belly and repeatedly said “your baby is going to die.”

Since then, my fiancé has been freaked out and waking up in the middle of the night having bad dreams. She told me she doesn’t want to speak to my brothers girlfriend for awhile because it felt like she made that story up and was trying to get a reaction from her.

I talked to my brother about how that was inappropriate and his response was “OMG, she was only telling a story.”

Do you think we are overreacting?!?