Grease a 8x8-inch casserole dish and set aside.

Cut bread into 1-inch chunks and spread evenly in the bottom of the casserole dish.

In a large bowl, whisk together milk, eggs, sugar, butter, vanilla extract, cinnamon, and nutmeg. Pour the mixture evenly over the bread, ensuring all slices are soaked.

Let the bread sit for 20-25 minutes to absorb the mixture.

Preheat oven to 350°F. Bake for 50-55 minutes until the pudding is jiggly but set in the center.

While baking, prepare the vanilla sauce by melting butter in a saucepan over low heat. Stir in sugar, heavy cream, and vanilla extract.

Cook over low heat, stirring frequently, until the mixture thickens and coats the back of a spoon.

Serve the warm bread pudding drizzled with vanilla sauce.