What can you tell me about desensitizing my puppy to dogs barking? It's the biggest stress for him. Could this be a bad, early warning sign of something in his temperament?

Hi,

I have a quick question... I really value your advice! I have a 14 week GSD puppy named Leo that I've had since 9 weeks. I'm following all your advice and it's going great. He's very outgoing, LOVES people, very very mouthy, extremely smart... learns QUICK! I take him for walks on busy streets and he's great, ok with trucks, Harleys... random noises. Sometimes when he sees something he doesn't recognize he'll get cautious, but then plug forward bravely to check it out. I'll drop a book near his crate when he's sleeping and he'll raise his head, stretch, yawn... and go back to sleep. Nothing startles him in the house... so I don't think he has weak nerves. He's definitely a hard puppy... and responding amazing to the marker training.

The problem the other day was that I took him on a walk and stopped by my neighbors house. Her 12 year old aussie dog was out on the yard and they like to play. (It's the kind of dog you recommend for a puppy to play with). He hasn't played with her for about a week or 2, and when he saw her... he stood back and barked like crazy, fur up on his back! I thought... sh*t! What do I do now??? Correct him? Is he too young? I didn't know! Help! I wasn't expecting this! So I said no a few times, popped his leash, tried to redirect his attention, but he was obviously on alarm... and after a minute he settled and they sniffed and then played for about 10 minutes. I continued on the walk to a very busy part of town and he did great... very brave little guy. But this alarmed me. What should I do next time he acts like that??? I have to mention the day before I took him to a street that had a lot of obnoxious dogs barking to desensitize him and I realized he wasn't ready for that street... I couldn't redirect his attention, and the treats definitely were not high value enough. I thought maybe he got a little rattled from all of the barking the day before and was on guard with this old dog because of that...? My intention is for this dog to be calm around dogs... what should I do for a puppy so young when he acts aggressively like this, especially to a dog he already knows? Is he too young to correct? If not, what's the best way to correct him? I DEFINITELY don't want to encourage barking or aggression. I have to add that he saw a few more dogs on our walk that were well behaved and they were basically invisible to him. There was one house that had a barking dog behind a gate and I had a really hard time redirecting his attention (I even brought steak but it barely worked. He ate it but looked VERY nervous). What can you tell me about desensitizing him to dogs barking... it's the biggest stress for him. I loose his attention immediately. Could this be a bad, early warning sign of something in his temperament? He's honestly great in all other respects... just "odd" around dogs and dog noises. Thank you so much :)

-JoAnna