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Heat oven to 350 degrees F. Spray 8x4-inch loaf pan with cooking spray. Combine all filling ingredients in small bowl.
Whisk flour, baking powder, baking soda and salt in medium bowl.
Beat 1 cup sugar and butter in large bowl at medium speed 3 minutes or until light and fluffy. Beat in egg and 1 1/4 teaspoons vanilla until smooth and well-blended. At low speed, beat in flour mixture in 3 parts alternately with 3/4 cup milk, beginning and ending with flour mixture.
Spread one-third of the batter in pan; sprinkle with half of the filling. Top with half of the remaining batter, spreading gently. Sprinkle with remaining filling. Spread with remaining batter. Gently run thin knife through batter to swirl.
Bake 50 to 55 minutes or until golden brown and skewer inserted in center comes out clean. Cool in pan on wire rack 10 minutes. Remove from pan; cool completely.
Whisk powdered sugar, 1/4 teaspoon vanilla and 1 tablespoon of the milk in small bowl, adding additional milk for desired consistency. Drizzle over top of bread, allowing to drip down sides. Sprinkle with remaining 3 tablespoons walnuts; press into icing. Let stand until set. (Bread can be made 3 days ahead. Cover and store at room temperature.)
To toast walnuts, place on baking sheet; bake at 350 degrees F. for 6 to 8 minutes or until pale brown.
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