01 - Combine warm milk, warm water, a pinch of sugar, and yeast in a small bowl. Let stand for 5–10 minutes until the mixture becomes foamy, indicating the yeast is active.
02 - In a large bowl, whisk together flour, remaining sugar, salt, and nutmeg. Add melted butter, eggs, vanilla extract, and the activated yeast mixture. Stir until combined, then knead by hand or with a stand mixer for 7–10 minutes until the dough is smooth and elastic.
03 - Place the dough in a greased bowl, cover with plastic wrap or a clean towel, and let rise in a warm, draft-free spot for 1–1.5 hours or until doubled in size.
04 - Punch down the risen dough and turn onto a lightly floured surface. Roll into a 10x20-inch rectangle. Brush the entire surface with melted butter.
05 - Mix brown sugar and cinnamon in a small bowl. Sprinkle the mixture evenly over the buttered dough, leaving a small border around the edges.
06 - Starting from the long edge, roll the dough tightly into a log. Pinch the seam firmly to seal.
07 - Shape the log into a ring and transfer to a parchment-lined baking sheet. Pinch the ends together securely to seal the circle.
08 - Cover the shaped cake loosely and let rise for 45–60 minutes until puffy and visibly increased in size.
09 - Preheat oven to 350°F. Bake the cake for 25–30 minutes until golden brown and cooked through. Cool completely on a wire rack.
10 - Whisk powdered sugar, milk, and vanilla extract in a bowl until smooth and pourable. Adjust consistency with additional milk if needed.
11 - Drizzle the icing evenly over the cooled cake. Immediately sprinkle purple, green, and gold decorating sugars in alternating bands while the icing is still wet.
12 - If following tradition, insert a plastic baby figurine from underneath the cooled cake before serving. Ensure guests are warned about the hidden surprise.