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1 Warm the milk and bloom the yeast: In a small saucepan set over medium-low heat add the milk and honey and stir constantly until the milk is warm and the honey has dissolved. Remove the milk from heat.
When it’s warm to the touch but not hot (about 100°F), sprinkle the yeast over the milk and stir. Set aside for 5 minutes until small bubbles start to form. If bubbles do not form, discard and start over with new yeast.
2 Melt the butter: In a small microwave-safe bowl add the cubed butter. Cover the bowl and microwave the butter for 30 to 45 seconds, or until the butter is mostly melted. Some solid chunks are ok.
3 Prepare the dough: Into a large bowl or the bowl of your stand mixer add the milk mixture and butter, making sure to scrape into the bowl any solid parts or yeast residue. Add the eggs, salt, cinnamon, nutmeg, vanilla and almond extract (if using).
Beat together with a whisk until blended, about 5 to 10 seconds on medium speed if using the mixer whisk attachment, or by hand. You just want to bring it together a bit.
4 Add the flour and knead the dough: Switch the attachment on your stand mixer to the dough hook. Add 3 cups flour and set the stand mixer to low until the flour has absorbed into the liquid.
Increase the speed to medium and mix until a rough dough forms and pulls away from the sides of the bowl. Knead the dough with the hook for 5 minutes until a smooth supple dough forms. The dough will be fairly soft, and a little tacky but not sticky.
(If you don’t have a stand mixer, stir the flour into the liquid with a wooden spoon until a rough dough forms. Then dust your hands and a clean surface lightly with flour and knead the dough by hand for 10 minutes.)
If the dough seems too wet as you knead it, add a little more flour, 1 tablespoon at a time. The dough should be pliable and not so sticky that you can’t handle it.
5 Let the dough rest: Lightly grease a bowl so the dough doesn’t stick. Stretch and form the dough into a smooth ball. Place the ball in the bowl, cover with plastic wrap and let sit in a warm place for 1 hour or until it has doubled in size.
6 Make the filling: About 10 minutes before the dough has finished rising, make the filling. In a medium microwave-safe bowl add the butter and cover the bowl. Set the microwave for 30-45 seconds. You want the butter melted completely.
Add the brown sugar, cinnamon, nutmeg, and salt to the melted butter. Stir until a thick paste forms. Cover and set aside until you’re ready to use.
7 Fill and roll the dough: Line a rimmed baking sheet with parchment paper or a silicon baking pad.
Once the dough has doubled, turn it out onto a clean work surface. Use a rolling pin to roll the dough into a large rectangle, about 10-inches by 24-inches wide. The dough will be pretty thin, about 1/4 to 1/2 inch thick.
Using a small offset spatula, butter knife, or silicon spatula, spread a thin layer of cinnamon sugar filling over the dough, leaving 1 inch at the top of the rectangle bare (the long side).
At first, it won’t seem like there is enough filling but keep spreading, scraping up any thicker areas. Eventually, you’ll be able to get a thin coating of the filling all over the dough. That’s what you want.
Starting at the long side, roll the dough up to form a long, thin log. Pat and press the 1-inch bare dough border at the top to the log, making sure it seals. Turn the log so the seal is at the bottom.
8 Cut and twist the dough: Using a sharp knife, cut the log lengthwise, splitting the log in half.
Twist the two halves together, making sure the cut “strip” side is facing upward.
Move the twisted rope to the prepared baking sheet and form a ring. Tuck the ends of the dough under each other to help seal the ring together.
9 Give the dough a second rise: Cover the ring with plastic wrap and leave it in a warm place to rise until puffy and almost double in size, about 45 to 60 minutes.
10 Preheat the oven: About 30 minutes into the second rise time, preheat the oven to 350°F.
11 Make the egg wash and bake the cake: Once the ring has risen, beat the egg yolk together with the water and gently brush it over the ring.
Bake in the oven 25 to 35 minutes, or until the top is golden brown and sounds hollow when you tap it. If you have an instant-read thermometer, it should be done at 195°F to 200°F. Don’t worry if some of the filling has oozed out while baking, that’s totally normal.
12 Cool the cake and add the baby: Let the cake cool on the baking pan for 10 minutes, then loosen the bread from the pan with a spatula. Then carefully move the cake to a wire rack, using two spatulas, and let cool completely to room temperature.
Once the cake has cooled, insert the baby into the cake (I usually push it in on the bottom so no one can tell where it is).
13 Make the glaze: To make the glaze, sift powdered sugar into a medium-sized bowl. Add 2 tablespoons of milk and the vanilla. Stir until the ingredients are fully incorporated and a glaze forms.
The glaze should be thick and opaque but still pourable. If the glaze is too thick, add more milk, 1/2 teaspoon at a time, until the desired thickness has formed.
14 Finish and serve the cake: Place the wire baking rack with the cooled cake over a rimmed baking sheet.
Spoon the glaze all over the cake making sure the top is completely covered. Then immediately sprinkle the colored sugar over the cake. The wet glaze will allow the sugar to adhere to the cake. Let the glaze and sugar dry, then move the cake to a serving platter.