1. Combine Sugar and Water: In a medium saucepan over medium heat, stir together sugar and water until the sugar dissolves. Avoid splashing the sides of the pan.
2. Cook Without Stirring: Increase heat slightly and let the mixture simmer gently. Resisting the urge to stir prevents crystallization. Watch carefully as the syrup deepens from clear to pale gold, then to amber—this can happen in under a minute once it starts changing color.
3. Finish with Cream and Butter: As soon as the syrup reaches a rich amber hue, remove from heat. Slowly pour in the warmed cream (stand back to avoid splatters) while whisking constantly, then whisk in the butter until the sauce is silky and smooth.
4. Season and Cool: Stir in a pinch of salt to balance sweetness. Transfer the caramel to a heat-proof bowl and let it cool slightly; it will thicken as it cools.

Preparing the Bread Pudding Base

1. Preheat and Prep: Heat your oven to 350 °F (175 °C). Generously butter a 9×9-inch baking dish or similarly sized oven-safe pan.
2. Toast the Bread Cubes (Optional): For added texture, spread bread cubes on a baking sheet and toast in the oven for 8–10 minutes until edges just begin to caramelize. Let them cool briefly.
3. Whisk Custard: In a large bowl, whisk together milk, heavy cream, eggs, sugar, vanilla, cinnamon, nutmeg (if using), and salt until smooth and pale.
4. Soak the Bread: Gently fold bread cubes into the custard, pressing them down so each piece absorbs liquid. Let the mixture rest for 15–20 minutes, stirring once or twice, until the bread is tender throughout but not falling apart.
5. Transfer to Dish: Pour the soaked bread evenly into the prepared baking dish, using a spatula to level the top.