Scalloped Potatoes

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2 tablespoons unsalted butter, plus more for the baking dish

1 medium onion, finely chopped

2 cups heavy cream

2 cups whole milk

1 bay leaf

1 teaspoon fresh thyme leaves

1/4 teaspoon ground nutmeg

kosher salt and black pepper

4 pounds russet potatoes (8 medium), peeled and sliced 1/8 inch thick

6 ounces Gruyère or Cheddar, grated (about 1 1/2 cups)

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