Romans 2:28-29

Romans 2:28-29 A person is not a Jew who is one only outwardly, nor is circumcision merely outward and physical.  No, a person is a Jew who is one inwardly; and circumcision is circumcision of the heart, by the Spirit, not by the written code. Such a person’s praise is not from other people, but from God.

Paul makes an important distinction in this passage between physical and spiritual circumcision as well as physical and spiritual Jews.  God made the Old Covenant with the physical nation of Israel that he redeemed physically from Egypt.  They received a physical circumcision based on their race alone.  They were born into the Mosaic Covenant whether or not they would ever be spiritually saved and only a remnant of them was saved spiritually.  

God made the New Covenant with a spiritual nation of believers that he redeems from the law of sin and death.  They receive a spiritual circumcision of the heart through spiritual regeneration by the Holy Spirit.  Through faith in Jesus Christ they are the true spiritual sons of Abraham.  No one has ever obtained a new heart by following the written code [Ten Commandments].

This passage clearly shows the picture [Old Covenant physical Israel] and the fulfillment [New Covenant spiritual Israel].  While there was a small remnant saved from the Old Testament era, it is a mistake to think of Old Covenant national Israel as a spiritual body of believers like the true New Covenant body of believers that are in Christ by faith.  Israel was a physical people of God and New Covenant believers are the spiritual people of God.