Microsoft Narrator is a synthesized text-to-speech program, designed for persons who are visually impaired.
When you use Microsoft Narrator, keystrokes that you type are read aloud.
When you use a Terminal Services client to establish a session with a Terminal Services Server, Microsoft Narrator announces your user name, domain name, and password.
Unlike Windows or Internet Explorer, which simply announce password, instead of the keystrokes, Terminal Services sends bitmap images, so Microsoft Narrator doesn't know it is announcing your password.
If you are wearing headphones, the password may not be heard by others, but I would turn down the volume before you type the password.