When speaking to the baby he kept saying how when she is older he will take her out with his kids or by herself without us, that they will have their own special relationship, she doesn't need anyone but him, they will have their own private conversations, he will take her out cruising in his car whilst I will be at home calling her to find out where she is (NOTE: it does translate differently in our native language and can be the sort of things one might jokingly say in our culture but he kept on making these comments and wouldn't stop. My husband wasn't present for this)
I've just thought about this from a different angle. ..is your husband's brother very jealous of him and competitive with him?
Because it sounds like he wants to wind you both up .... About him establishing an independent, special relationship with your child - that excludes you.
And all the holding the baby and dominating and making you uncomfortable is rather along those lines too, and maybe he thinks he'll get the "bond" going from as young as possible.
I'm wondering if he (secretly or not) is really really jealous of his brother, always in competition... And this; his brothers first child, he sees as an opportunity to be competitive again . In a very personal/"intimate" way;
. "Oh she prefers me, she loves her uncle, she prefers our family, we have a special bond" .... To get at him - and get at him through you.
He's naturally got you uncomfortable and stressed, and he can't truly be so utterly obvious to that, can he?
Is he enjoying it? And perhaps enjoying that he can do it and if you complain to family members - he'll just say "oh it's all jokes, she's so sensitive, she's such a hormonal new Mother, she's so upright".
I've actually revised my opinion from "unhinged, potential paedo" to think that it might be a power/dominance game.
Has he always been a bit jealous and competitive with his brother? Does he feel like his brother is the favoured one? Is he always jibing and "jokily" getting at him (and you)?
Maybe he's pissed off you two have produced the first (?) grand daughter. Something new/special.
He seems to be determined to get in there in the middle of your bond (both of your).bond with you child and intercede and take a position he shouldn't have.
If he had a history of power plays and dominance disguised by "joking" and banter, this could just be the latest.
I think he wants you two unsettled and uncomfortable and "insecure".
He's doing it through you too. Maybe if he did it too obviously in front of his brother it might turn into an argument/he might even risk it becoming physical; by doing it to you, and saying most of these things in front of you, not him; he's doing it to the person who is unlikely to get physical, who can't physically overpower or eject him and who, when she reports what he's said, will likely get "oh you know what he's like, he's only joking around, she's too sensitive, she's a woman, she's hormonal, she's over protective, blah blah blah".
Even in this least worst case scenario, he's clearly a nasty piece of work, there's clearly an extremely unhealthy family dynamic, and you'd be better far away from these people with your child.