Again, the language comes from Hosea 2:23. The prophet had been instructed to name his daughter No Mercy
as a living reminder to Israel that their apostasy had prompted God to withhold all mercy from his covenant people (Hosea 1:6). Yet God promised to have mercy and work repentance among his people (Hosea 2:14–15). So God can say in Hosea 2:23: I will have mercy on No Mercy.
Peter’s readers had historically not been objects of God’s mercy (for they did not know the gospel), but that changed (with Pentecost) as the Holy Spirit sent preachers to Pontus, Galatia, Cappadocia, Asia, and Bithynia, and the Lord worked rebirth in the hearts of these elect. They were no more deserving than apostate Israel was and yet received mercy.
This work of grace gives additional colour to the excellencies
these elect exiles may proclaim.
10 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.