Preheat oven to 350°F and grease and flour (or spray with baking spray) a 10x5½-inch loaf pan.
In a saucepan set over medium heat, add 2 tablespoons butter, the diced apples, nutmeg, and cinnamon. Cook 4-5 minutes or until apples have softened. Remove from heat and let cool.
10 tablespoons unsalted butter, 2 large baking apples, ½ teaspoon ground nutmeg, 2 teaspoons ground cinnamon
In a medium-sized bowl, sift the flour, baking powder, and salt together.
2 cups all-purpose flour, 2 teaspoons baking powder, 1 teaspoon kosher salt
In a separate large bowl, using a hand mixer, cream the remaining ½ cup butter and 1 cup sugar together. Add the eggs, one-at-a-time, beating just until egg yolk is no longer visible. Mix in the vanilla and milk. Add dry ingredients in 1-cup increments. Mix just until flour is longer visible. Set aside.
1 cup granulated sugar, 3 large eggs, 1 teaspoon pure vanilla extract, ¼ cup milk
Make the filling: In a medium bowl, combine the cream cheese, 1 egg, ½ cup sugar, and the zest of the lemon. Mix until smooth.
8 ounces cream cheese, 1 large egg, ½ cup granulated sugar, 1 tablespoon lemon zest
Spread 1 cup of batter in the bottom of the prepared pan, and fold in the apples and chopped caramels to the remaining batter.
8 baking caramels
Pour half of the remaining batter into the pan. Spoon and spread the cream cheese mixture evenly over the batter, and cover with the remaining batter. Sprinkle the top of the bread with turbinado sugar, if desired.
2 tablespoons turbinado sugar
Bake at 350°F for 50-60 minutes. Bread is done when it doesn’t wiggle when shaken lightly and springs back when gently pressed in the thickest part (190-200°F)
Transfer bread to a cooling rack and cool 15 minutes. Remove bread from pan and allow to completely cool.