Preheat oven to 300 degrees F (150 degrees C). Generously butter an 8x8 inch baking dish. Prepare a water bath for the baking dish by placing a larger dish in the oven, and partially filling it with hot water.
Place bread cubes in the baking dish. In a medium bowl, beat together eggs, sugar, and vanilla. Slowly whisk in the scalded milk. Pour over the bread. Sprinkle with nutmeg, brown sugar, and pecans.
Place the baking dish in the water bath. Bake for 50 to 60 minutes, or until a knife inserted in the middle comes out clean. Serve either hot or chilled.
