But you are a chosen race, a royal priesthood, a holy nation, a people for his own possession, that you may proclaim the excellencies of him who called you out of darkness into his marvelous light. Once you were not a people, but now you are God's people; once you had not received mercy, but now you have received mercy. (1 Peter 2:9-10)
Interesting note: "nation" is the Greek ethnos, which generally referred to "a race, a people, the Gentiles". This usually meant unbelieving Gentiles, or non-Jews, distinct and separate from Jewish people.
So when Peter says "holy nation", it was probably far more shockingly magnificent to the original readers than it is to us. I wonder if they dwelt on that concept - these Gentile dogs, formerly cut off from the blessings and promises of the people of God, have now been declared holy, set apart for God, declared to be the people of God. Imagine that. Truly Christ tore the veil. Truly Christ abolished the enmity. The Jewish believers probably thought of "holy nation [holy Gentiles]" as an oxymoron. How is it possible?
It is possible only through Christ and His excellencies, His light, and His mercy.